|>pbl.tpt = common carrier is a person or
company that transports goods or people for any person or company. A common
carrier offers its services to the general public under license or authority
provided by a regulatory body. The regulatory body has usually been granted
"ministerial authority" by the legislation which created it. The regulatory
body may create, interpret, and enforce its regulations upon the common
carrier (subject to judicial review) with independence and finality, as long
as it acts within the bounds of the enabling legislation [US.gvt
regulation]

|>cns = concession| "investorwords.com" defines cns as an
agreement made between a country [IE=a "sovereign" nation-state] and a foreign
corporation. "The country offers incentives, such as reduced taxes and other
'concessions', to the corporation in exchange for the corporation investing in
that country." No mention of a significantly different sort of cns in which
corporations offer incentives (often "bribes") to country authorities
(characteristically leaders of a "developing country") in order to take charge
of certain domestic enterprises

|>fdu = fiducia, trust, specifically trust in
economic market places|
The famous giant "trusts" of the late 19th century confuse our understanding of
the basic economic concept of fiducia. These giant "trusts" were in offense of traditional fiduciary
trust. These giant "trusts" in no essential way represented fiducia [ F/vs-fdu.lwx/ |
SAC#1 | SAC#2 ]

|>hst.gph = Historiography. The manner in which
histories are told. EG=The story of energy and
politics. Authors’ "point of view" and their larger sense of what is
significant. What is the story really about? [Read "Ways of Seeing History",
sections on interests and
bias]. Critical mindedness. Level of generalization or detail. Closeness to
identified sources, especially sources that can be checked by readers, by us

|>mlf = Malfeasance, corruption| A difficult term to define, possibly not a "technical" term
at all| In electronic library catalog, F/"Global Corruption"/, and consider Laurence Cockcroft, _Global Corruption: Money, power, and ethics in the modern world (2012).
Cockcroft helps bring some clarity. Whether centered in government or companies, corruption
follows from when those who hold offices or managerial positions convert these political or
economic institutions and/or "businesses" into private property and personal enterprise. Whether
the property of public or governmental agencies or of private companies or individuals, resources
that are held in "trust" [F/fdu/] experience corruption when they are treated as personal economic
opportunity, if not exclusively private property. [In the history of political institutions, this
threatens a reversal of one of the key accomplishments of European post-Enlightened politics = Public
offices were not to be the property or possession of those who hold them.] In this sense, Cockcroft is
aware that governments and businesses are equally capable of becoming
corrupt. Public wealth ("the wealth of nations", pbl.wlt) is converted into,
or diverted to, the production of private wealth (prv.wlt). Cockcroft emphasizes
how prevalent mlf is in the global energy sector, and he highlights NGR in
the 1990s, Alberto Fujimori's Peru and Suharto's NDN. However, Cockcroft
surprises us when he points out that mlf does occasionally have broad ekn benefits for the
larger community, however ethically or legally or morally reprehensible it might
be. Does ekn benefit trump all other considerations? Corruption seems deeply
embedded in the modern globalized economy. What's to be done? Cockcroft has
five answers (1) strengthen regulation, (2) abolish secret
arrangements (tax hideaways, offshore accounts), (3) stamp out bribery,
(4) intensify efforts against organized crime, and finally, a capstone measure,
(5) make mlf an offense against civil liberties or human rights, a form of
international crime, and put it under the jurisdiction of the ICC
[ID]. Global
cooperation and enforcement are essential, in other words, a significant alteration
in a 4-century-old global tradition of national sovereignty
[ID]
\\
*--Zoe Cormack in a review of Cockcroft [*2013se27:TLS:25] criticized the optimism, if not
naiveté, of Cockcroft's account
*--SAC editor says that, in truth, "law and order" can be supported strongly by those
who are certain that criminality will never be fully eradicated. One need not be naive to
think that malfeasance can be brought under satisfactory control
*-->Teachout,Zephyr|_Corruption in America: From Benjamin Franklin's Snuff Box
to Citizens United [ W-ID#1 |
W-ID#2 |
W-ID#3 |
8x11:nrg NYR rvw]

|>prj = project

|>rebdg = Reconstruction, IRQ Reconstruction, a major USA policy goal, after
years of HsnSdm but mainly after "shock & awe" destruction| Is there a
relationship w/ Reconstruction in occupied South after USA Cvl.wrx [Wki]?
CF="Carpetbaggers" [Wki]

Often "international" and "multinational" are taken to be synonymous
with tntn. But they should be distinguished from tntn. They
imply "among" rather than "above" sovereign nation-states. They imply minimal or
no effective power over nation-states

Transnational organizations possess or strive to possess some degree of authority or power over states and independence
from them, even if located in and intimately related to one or more of them

|>cxx = <>Cartel-like collusions
for price fixing, kickbacks (strictly speaking among cmp~ that conventional
wisdom insisted shd be competing,
but also among other jurisdictional institutions, EG=governments)| Often secret
but, as in the case of OPEC agreement about oil producing nations
[ID], very open and global| CF=snd ~~ vs-fdu mvt

|>CENRG = <>Center for Energy,
Natural Resources and Geopolitics| Ariel Cohen is an expert on energy policy, with a particular
focus on Russia/Eurasia, Eastern and Central Europe, and the Middle East. Dr. Cohen also has
specific expertise in oil and gas mid-stream [u&d] technologies, including GTL
and LNG. He serves as the Director of CENRG at the Institute for Analysis of Global Security (IAGS). CENRG
focuses on the nexus between energy, geopolitics and security, and natural
resources and growth. Dr. Cohen is also Principal of International Market
Analysis Ltd., a Washington, D.C.-based advisory firm [CENRG] CENRG publishes
Journal
of Energy Security

Although it might be too much to posit a totally
interdependent relationship between American oil policy and the growth of OPEC,
there seems little doubt that the two were related. By 1960 the
oil-producing countries had learned enough about cxx and oligopolistic politics
to bind themselves together into a cxx. By taking advantage of the world's
hunger for oil (which by the beginning of the 1970s was already leading to spot
shortages) and opening new fields to independent pmpers in LBY, OPEC was
able to break [Big.crp.nrg AfroAsia=] the control over Mideast oil that the oil majors had enjoyed
since the 1920s and to replace it with OPEC's own organization. Although the
power of OPEC was not fully realized until the Arab oil embargo of 1973, the
turning point insofar as OPEC's development was concerned was the LBYn oil
settlements of 1970. By playing the independents off against the majors, LBY
gained substantial increases in its oil revenues and established a pattern for
other nations to follow.

OPEC was organized in Baghdad in September 1960 in response to declining prices for
Mideast oil. The original members—SaA, Iran, Iraq, KWT, and Venezuela—resolved
that they could "no longer remain indifferent to the attitude heretofore adopted
by the oil companies in effecting price modifications." Over the next ten years
OPEC was able to establish a revenue floor for Mideast oil that rose from $0.80 a barrel at the
beginning of the 1960s to slightly below $1.00 a barrel at the end of the
decade.2
[Kaufman.OIL cites *1975:WDC|SNT.MO=88-89]

Meanwhile, LBY, which joined OPEC in 1962, [ndp.crp.nrg
vs-Big.crp.nrg] opened its new oil fields to independents and
majors. By the middle of the 1960s the LBYn-based independents represented a
real competitive threat to the majors; of the 1.2mBd pmped in 1965, the independents produced nearly 46 percent. Friction
developed between them and the majors over LBYn pricing policies. The majors
were more willing than the independents to accept increases for oil because they
were less dependent on LBYn supplies than the independents and, unlike them,
did not have to sell oil at cut-rate prices to European refiners. Moreover, the
independents sought the rapid expansion of LBYn oil production and the majors
wanted a more moderate development, faced as they were with huge production
commitments in their AfroAsia cns~.3

In September 1969 a new regime came to power in LBY following a successful coup
[QadM] led by Colonel Muamer Qaddafi. Immediately the Qaddafi regime sought to extract more
revenue from the oil pmpers by inviting new foreign firms to Tripoli to
discuss LBYn oil cns~. At the same time, LBY ordered a production cutback
by Occidental Oil, which was almost totally dependent on LBYn oil for its
foreign production. Occidental tried to resist LBYn pressure by turning to
Exxon for replacement oil at little more than cost. However, Exxon refused to
sell to Occidental at less than the market price, claiming, appropriately
enough, that by the consent decree of 1960 it was forbidden to sell oil to one
company at a lower price than it sold it to others. On this basis Occidental
felt it had no choice other than to try to reach the most favorable agreement
possible with LBY. In September 1970 Occidental signed an agreement with LBY
that raised the price of oil 30 cents a barrel and an additional 2 cents a year
for five years and also increased the income tax rate from 50 to 58 percent.4

Occidental's agreement with LBY started a chain reaction, as other independents also agreed
to new, more costly terms with LBY. This situation placed the oil majors and
some of the larger independents in a difficult position. Although in the past
the oil majors had accepted some increase in the price of LBYn oil, they were
not prepared to accept such a rise as LBY now demanded. The majors were forced
with two unpleasant choices. They could refuse new terms, which could lead to
loss of their cns~ in LBY, or they could meet LBYn demands, which in
all likelihood would lead to similar demands by the other oil-producing
countries; in other words, an increase in LBYn prices would "leapfrog" into the
PER.G countries. After unsuccessfully seeking government support against LBY,
the oil companies gave in to its demands, and by September 30 virtually all the
companies had agreed to large increases in prices and a rise in the income tax
rate from 50 to 55 percent.5

As the oil companies feared, the LBYn price increase leapfrogged across the
PER.G and all
the other oil-producing countries demanded large increases in price for their
nrg.pc oil and a rise in their income tax structure. Meeting in Caracas,
Venezuela in December 1970, OPEC established a Committee of the Gulf Producing
Countries (the Gulf Committee) consisting of the oil-producing countries in the
PER.G. OPEC demanded that the oil companies begin negotiations for a new oil
agreement with the Gulf Committee in Teheran within thirty-one days. Even before
negotiations began, however, LBY demanded additional price and tax increases and
a large freight premium.6

The oil companies responded by seeking joint action against OPEC through a joint
negotiating front. As Sir David Barren of Shell remarked later to the SNT.MC, "Our Shell view was that the
avalanche had begun and that our best hope of withstanding the pressure being
exerted by the members of OPEC would lie in the companies refusing to be picked
off one by one in any country and by declining to deal with the Producers except
on a total global basis."7

Acting in concert, the oil majors notified OPEC that they could not "further negotiate the
development of claims by member countries of OPEC on any other basis than one
which reaches a settlement simultaneously with all producing governments
concerned." At the same time, the companies that enjoyed cns~ in LBY
agreed to supply replacement oil at cost to any company forced by LBY to cut
back production.8

Although the oil companies had been concerned about the legality of such joint action under
the vs-fdu.lwx~, the Justice Department issued "Business Review Letters" to John
McCloy, who represented the companies, which stated that the Department of
Justice did not plan to institute antitrust proceedings either with respect to
the message to OPEC or to the producers arrangement concerning LBY. This action gave
the oil companies wide latitude in working out agreements relative to the
Mideast position. As a Senate report on multinational oil companies commented,
"In effect... the Business Review Letters insulated the companies from the
possibility of antitrust prosecution by the U. S. Government as a consequence of
any activities they might undertake pursuant to their agreements."9

To strengthen their position still further McCloy and the chief executives of the
major oil companies met with Secretary of State William Rogers and
Undersecretary of State John Irwin, III on January 15,1971, to discuss the
possibility of sending a high-ranking stt.dpt official, such as Irwin,
to negotiate with the OPEC nations on behalf of the oil companies. This was
agreed to, and Irwin was sent to the Mideast with instructions to prevent an
impasse between OPEC and the oil companies and to seek assurances of a
continued supply of oil at reasonable prices. About the same time the major oil
companies organized a London Policy Group to formulate overall policy regarding
forthcoming negotiations with OPEC in Teheran and LBY. A corresponding group was
established in New York, which also supplied London with technical information
and expertise on matters such as freight and transportation questions and on
legal problems that might arise in negotiation with the OPEC nations.10

What might have happened had the oil companies, backed by
Washington, been able to maintain their united front against the OPEC nations
is now a moot question because, as the Senate Subcommittee on Multinational
Corporations has commented, the strategy devised by the oil companies "did not
withstand its first test." The Irwin Mission to the Mideast was a colossal
failure. Under the prodding of the Shah of Iran -- who insisted upon separate oil
negotiations for the Gulf-producing countries but who also promised not to
demand more favorable terms such as those that might be worked out with other
producing countries (namely LBY) -- Irwin and the American Ambassador for Iran,
Douglas MacArthur, agreed to recommend to the stt.dpt separate
negotiations with the Gulf countries. The stt.dpt concurred in this
recommendation without even consulting oil industry representatives. In this
way, the united front that had been put together so meticulously by the oil
companies and the stt.dpt came apart. Furthermore, the Gulf Committee
showed that it could drive a wedge between industry negotiators and the United
States government.11

THE OIL CARTEL CASE

Oil industry representatives opened talks with the PER.G nations in Teheran and with the LBYn
government in Tripoli at the beginning of 1971. At first the industry
negotiators attempted to follow a policy of separate but necessarily connected
talks whereby any negotiated settlement would have to be acceptable to all
interested parties, thus eliminating the possibility of leapfrogging. In other
words, while agreeing to separate talks, the oil industry wanted one
comprehensive proposal for all producing nations. Once more, however, the oil
industry had to backtrack as the producing nations rejected its proposal.
Instead, the Gulf Committee demanded that substantive negotiations with it
begin immediately, and LBY made it clear that it would not open its negotiations
until the Teheran talks were concluded.12

After several deadlocks in the negotiations with the Gulf Committee the oil industry
completed an agreement with it on February 14,1971.The agreement
provided for an average increase of 30 cents a barrel of oil immediately,
escalating to 50 cents by the termination of the settlement in December 1975. It
also stipulated that none of the Gulf countries would seek to obtain more
advantageous terms negotiated by other producing countries.13

Although the financial cost of the agreement was high, oil industry executives justified it
on the grounds that the agreement would insure stability of price and supply for
the next few years.14 In this belief they were wrong. Even before the
agreement was concluded, Sheikh Zaki Yamani of SaA indicated that the growing
world scarcity of oil would lead to new price demands by the oil-producing
countries. Moreover, the settlement reached by LBY in March provided for an
immediate increase of 65 cents a barrel; LBY thus once more leapfrogged ahead of
the PER.G countries.15

On September 22,1971, OPEC met again in Beirut where it passed two resolutions, one calling
for participation in the producing companies on an individual or group basis and
the other seeking changes in the price structure of oil to reflect the dwindling
value of the American dollar. Acting unilaterally, LBY sought to increase its
share of oil revenues through directives to the oil companies regarding the exchange rates
applicable to their payments. At the same time Iran sought to reopen negotiations
on its settlement with the oil industry.16

In response to these new moves within the OPEC community, John McCloy once more requested
from the Justice Department "BusinessReview Letters" authorizing the oil
industry to negotiate jointly on currency parity and participation issues with
OPEC without fear of vs-fdu action by the Justice Department. The necessary
assurances were given, and on January 20, 1972, the companies and OPEC met in
Geneva, Switzerland to consider the currency and participation issues. There
the oil companies agreed to increases in the price of oil amounting to 8.5
percent.17

A much more difficult problem was the one of participation. The sheikdoms of Abu Dhabi,
Qatar, and KWT all won agreements for 20 percent ownership from the companies.
In Iraq, after failing to win a greater share in revenue, participation in the
cns~, and a guarantee of high production, the government simply
nationalized the consortium that had operated the fields since 1928.18

The battleground of the struggle over participation, however, was Aramco. Throughout
1972 representatives of the Aramco partnership bargained with Sheikh Yamani over
the participation issue. Secretary of the Treasury John Connally even made a
threatening speech in which he remarked that Washington might soon have to back
up private companies in dealings with foreign governments involving natural
resources deemed vital to the United States. But once more the oil companies
yielded ground. Finally, in October they accepted the principle of 25 percent
participation rising to 51 percent by 1983. By October 1973 all the PER.G states
had reached final agreement with the oil companies. LBY, which had not
participated in the OPEC negotiations, demanded an immediate 51 percent
participation and in the summer of 1973 nationalized those companies that did
not agree to surrender this share.19

Why the oil companies agreed to participation is not entirely clear. According to oil
company spokesmen they consented for fear of more drastic action by the
producing countries, such as nationalization. But Christopher Rand in [Rand.dmk] has hypothesized that the companies agreed to a
participation settlement because they were more interested in the supply of oil
than the ownership of cns~. According to Rand, as long as the companies
maintained a near monopoly over geological and rzv~ data, they could preserve
their knowledge of where to invest. As long as they maintained a substantial
minority interest in the cns (40 percent), they would be able to maintain
their privileged position in the Mideast while losing none of their tax
advantages in the United States. To be sure, participation by the
oil-producing countries might result-and indeed did result-in higher buy-back
prices (the price paid for the oil bought back from the participants) but these
increases could be passed on to the consumer. Finally, companies like Aramco
would reap a windfall in compensation paid for the participation shares. As Rand
thus notes:

... the companies had started to move the center of gravity of their industry's
profitability downstream and west. They ... had begun to relax their grip on the
ceiling of posted prices—but simple markups on refined product sales reimbursed
them for this and they retained their hold over the international trade.

In other words, what mattered to the oil companies now was not so much who owned the oil
but who was able to pay for it.20

Whether or not Rand is correct (his analysis is based for the most part on circumstantial
evidence) one point is beyond dispute; by the eve of the Arab-Israeli War in
October 1973, the oil-producing nations, acting through OPEC, had become
powerful enough to dictate terms to the oil industry. In fact, as Rand also
comments, the participation negotiations of 1972-73 were anticlimactic in
comparison with the breakthrough the oil states had achieved in 1970-71,
especially the LBYn settlement and the Teheran and Tripoli negotiations. The
oil embargo following the Arab-Israel war merely made manifest how
well OPEC had learned the lessons of cxx politics from its former teachers.

Yet, what had developed by 1973 was not so much the breakup of the old oil cxx and its replacement by
OPEC as the interlocking of an oligopoly and a cxx, the first consisting of the
oil majors, who continued to control most of the flow from the Mideast and who
were interested in the supply of oil, and the OPEC countries, who were concerned
primarily with the profits to be made from the production and sale to the
companies of oil. By their control of world oil, the oil majors (and some of the larger independents, like Occidental) provided the
OPEC countries with assured outlets for their oil without the type of
competition that could drive prices down. At the same time the OPEC nations
afforded the oil majors a preferred status insofar as supplies of oil were
concerned. In its own way, therefore, OPEC contributed to the rationalization
and stabilization of the international oil market, which, after all, had been
the purpose of the old oil cxx in the first place.

EPILOGUE NOTES:113-14

1. Anthony Sampson thus writes that a new generation of Arab technocrats followed carefully
the attacks on the oil companies in the United States and that references were
repeatedly made by the OPEC countries to facts contained in the Federal Trade
Commission report on the international oil cxx. Sampson.SEVEN=162.
2. *1975:WDC|SNT.MO=88-89.
3. Ibid., pp. 90-91 and 97-100.
4. Ibid., pp. 121-24.
5. Ibid., pp. 124.
6. Ibid., p. 126.
7. Ibid., p. 127. See also John J. McCloy to Richard W. McLaren, July 31, 1971 [SNT.MC,6=234]. McCloy, who
represented the oil majors and some of the larger independents in the Mideast, commented,

The companies were . . . faced with the threat of repeated 'leapfrogging' on
pain of seizure of oil producing properties or serious stoppages with
consequent disruption of the supply of oil to the consuming countries. In
the circumstances, it was clear that the only hope of achieving stability of
supply was for the companies to join together and negotiate with all members
of OPEC as a group.

"The names of the companies present a special difficulty, for some of these have changed in the course of their long lifetimes
[...]. While their names have changed, their character has been a continuous
development" [Sampson.SEVEN=xiv].

Should we wonder why crp~ as legal persons have frequent need for aliases?
Following this line of thought, should they, as legal persons before a court of law, fall under the "three strikes and you're out"?

a{}b{}c{}d{}e{}|>BP.crp.nrg <>British Petroleum Co| n{}o{7ss.lgc}f{
|>Anglo-Persian|>AP.crp.nrg
|>Anglo-Iranian|>AI.crp.nrg|>AIOC| G/1909ap
Due to the distance from Europe to Persia (H02) and the logistical difficulties involved, a
130-mile ptpt to the coast (R11 ??) was not completed until 1911 and a source
refinery (PL07) on the island of Abadan(R13a) was not completed until 1913, at
which point the company once again needed financial help [Greene.STRATEGIES:240]

GryCh had been pressing the Foreign Office for a subsidy since 1912, arguing that Shell
was a foreign company whose loyalty was questionable and a marketing monopoly.
The Foreign Office was convinced but the admirals were wary of involvement and
interested in price. After a public outcry against high oil prices in 1911
Churchill, who became First Lord of the Admiralty in October 1911, was
suspicious of Shell and came out in favor of AP.crp.nrg (EC14a), "Against this (the
dominance of Standard and Shell),... the Burmah Oil Company, with its offshoot
the Anglo-Persian Oil Company, is almost the only noticeable feature." Of Shell
he said, "It is their policy...to acquire control of the sources and means of
supply and then to regulate the production and the market price... We have no
quarrel with Shell. We have always found them courteous, considerate, ready to
oblige, anxious to serve the Admiralty and to promote the interests of the
British Navy and the British Empire—at a price... The only difficulty has been
price. On that point of course we have been treated with the full rigor of the
game... we shall not run any risk of getting into the hands of these very good
people."17 An independent blue ribbon commission, including Sir John
Cadman, was sent to Persia and reported favorably on the oil fields. Cadman
(PV06) then a professor of petroleum, civil servant, and Britain's leading oil
expert, subsequently joined AP.crp.nrg in 1921 and succeeded GryCh in 1927 as
chairman [Greene.STRATEGIES:240]

In 1914 Churchill convinced Parliament to bail AP.crp.nrg (PL05)(PL08), investing £2 million
for just over 50% of the company (EC14b)(R14a). His desire like
Fisher's was to convert the Royal Navy to oil because oil-fired ships were much
faster, more efficient, and had greater range than coal-fired ships [Greene.STRATEGIES:240]

AP.crp.nrg got capital in exchange for an oil supply contract (R14a,
R14b, PL04) for the Navy at a
cut-rate price.21 [nvy.rsv] Some of the oil companies' greatest difficulties
have come from navies who, since this precedent, have seemed to feel entitled to
a cut-rate price [GO/Socal/ or /Chv./].

The agreement stipulated that the company must remain an independent British company
and every director must be a British subject (PL01).22 To represent
its ownership the government was to appoint two directors with veto power over
issues of national strategic importance. But otherwise the government was not to
interfere with the conduct of the business (PL08). If this distinction was
clearly specified in the government's agreement with the company, elsewhere the
distinction of being an autonomous company majority owned by the British
government was blurred.23 "Even in Persia," Lord Strathalmond,
chairman from 1940 to 1954, said, "they were never quite convinced that I had
not come straight from Whitehall."24 In Iraq the company and the
British government were thought to be one and the same.25 As events
show, this special business-government relationship was both a strength (R14c)
and a weakness (H01) [Greene.STRATEGIES:241]

Mikdashi analyzed the financial and political aspects of
the agreement, points 1 -5 below, concluding that the government in retrospect
got a good deal, though at the time Marcus Samuel of Shell considered it a
"gigantic subsidy" to AP.crp.nrg and pleaded for similar treatment.26 (1)
The government purchased stock at par at a time when market values were much
higher and a large shareholder of AP.crp.nrg (probably Burmah) urged in 1914 that
existing shareholders be given the option of providing at par the additional
capital required.27 (2) The lifelong fuel oil supply contract with
the British Navy (R14b) called for prices which were much lower than those
prevailing in the market and provided for an automatic reduction in price up to
25% of the excess of profits above dividend requirements. Cumulative savings
from this provision were estimated by Churchill in 1923 at £7.5 million and by
the Persians in 1951 at $500 million.28 (3) The contract assured the
company a profit regardless of market conditions, insulated it from all
competition, and spared the company the expense of building a marketing
organization in competition with the large international oil companies (PL09).29
But it also directed its production technology to a specific product, fuel oil
(PL19). The government favored and assisted (R04) the company in the sale of
products to other buyers, like the Iraqi and Indian railroads. Churchill openly
declared that the British government was "bound to help and bound to enrich
AP.crp.nrg" [Greene.STRATEGIES:241]

Its political assistance in limiting competition and influencing Near Eastern governments
greatly benefitted the company. (5) AP.crp.nrg made some "public service" expenditures
it might not have made were it not for government ownership (PL06)(PL10)" [Greene.STRATEGIES:242]

As the visible symbol not only of the British Empire (PL01)
but also of western civilization the company recognized its social
responsibility in bringing that civilization to Persia. It trained labor and
built roads, houses, schools, and communications in the country (SR01, PL10). As
at Jersey Standard, the medical department made some of the greatest
contributions. Providing medical care in Persia not only to their own employees
but to anyone in the area was a company policy (PL06)(SR02?) from its earliest
days. An extraordinary doctor and mediator, MY. Young, known to all as the
Little Doctor, led this effort from 1907 to 1936. So great was the respect for
him that the neutrality of Persia during WW1 and the absence of trouble in the
oil fields during the war has been attributed to his personal influence" [Greene.STRATEGIES:242]

It is impossible to place a dollar value on the benefits
(PL05) of the special relationship (R14c) to the company. The government's
restriction of competition is surely responsible for the company's leading
market share in the Mideast. Without it Jersey would have entered Persia in
1921; there might not have been any Red Line agreement in 1928
[ID], and it is
unlikely that AP.crp.nrg would have gotten into KWT in 1934. With a guaranteed
contract for large amounts of fuel oil to the British Navy (R14b) the government
gave the company a different product and marketing strategy (PL04) than the
kerosene/gasoline-sold-to-private consumers-and-industry strategies of the other
Majors. The contract also gave AP.crp.nrg large scale (R14d) in production,
refining, and bulk sale marketing (PL11) [Greene.STRATEGIES:242]

The characteristics of Persian oil—high quality, unlimited
quantity, and low cost (EC9, RI3c) also shaped AP.crp.nrg's product and
marketing policies (PL04)(PL09)(PL11). They overcame the handicap (EC07) of
Persia's
remoteness from markets. With or without the contract (R14b) and special
relationship with the government (R14c. HI) AP.crp.nrg would still have been
able to compete successfully with any other company. The government's military
protection was not required again until WW2 and in 1951 when needed was not
used. The influence of the British government with the Persian government (EC06)
permitted the company to adopt courses of action and attitudes (PL13) in its
relationship with the Persian government that ultimately cost it a great deal
(H01) [Greene.STRATEGIES:242]

In early 1915 as World War 1 (EC15) moved into full force and wtpt rates soared, the
company made another important strategic commitment that would become its second
strongest vertical segment (after production PL02). In April 1915 it formed the
British Tanker Company (R15), a wholly owned subsidiary to own and manage its
own wtpt fleet (PL12), in order to obtain secure and reasonable marine
transportation [Greene.STRATEGIES:242]

[ mlf=] Disputes between the company and the Persian government (PL13) led to (he
"interpretative" agreement of 1920 (R20) which in effect revised the D'Arcy cns to reduce the base for royalty payments to the Persian government to
the profits of the producing company in Persia. The D'Arcy cns had
originally specified the Persian government's share to be 16% of net profits
generated by all subsidiaries in exploiting Persian oil (including refining,
marketing, and transportation) [Greene.STRATEGIES:243]

On occasion the company did not pay this amount. The Persian government was weak,
inefficient, and [?like the company itself?] corrupt (EC04). It did little except to organize bribery for its
rulers and provided no protection in areas where its authority was nominal.
According to one account the local press referred to them as the "robber
princes." The company had already had to give £3,000/ year and a 3% equity share
in all companies working on their land to the Bakhtiari tribesmen for
"protection" in 1905 (H02). In 1914 it unilaterally deducted these payments from
the Persian government's share. In 1918 it suspended payments over a war damage
claim against Bakhtiari tribesmen for blowing up its ptpt in 1915. It refused to
arbitrate this dispute despite explicit provisions for arbitration in the
cns (PL13) [Greene.STRATEGIES:243]

On these and other smaller matters in its dealings with the Persians the company took
advantage of the strength of the British government (EC06) and the weakness of
the Persian government (EC04), fostering a tradition of inflexible and arbitrary
dealings (PL13) which later caused it great difficulty. It refused to allow the
Persian govenment any participation in management or equity (PL14) and it tried
to induce the Bakhtiaris to sell their shares to British interests. Bribery was
the accepted method of getting things done. Both the company and the British
government subsidized Persian officials when they wanted something (PL03) [Greene.STRATEGIES:243]

With the Persian treasury and rulers dependent on Britain, a treaty was signed in 1919
giving British advisors the right to negotiate for the Persians. Three Persian
officials received £131,000 for signing the agreement. To settle the disputes
between AP.crp.nrg and the Persian govenment, negotiations were held between a British
Treasury official on behalf of the Persians and AP.crp.nrg to make the company live up
to the payments promised and give up artificial bookkeeping methods unfavorable
to the interests of Persia [Greene.STRATEGIES:243]

The result of these "negotiations" was the "interpretative" agreement of 1920 (R20) which
excluded from the calculation of royalty payments profits of the newly formed
wtpt subsidiary, subsidiaries trading non-Persian oil, large amounts of the
profit of subsidiaries refining and marketing oil outside Persia. and all
profits of less than majority owned subsidiaries. Freed from the restrictions of
the D'Arcy cns AP.crp.nrg could now expand outside (PL15) Persia. Persia
received £1 million in settlement of all grievances [Greene.STRATEGIES:243]

By 1920 the major elements of Anglo-Persian's strategy
were in place. It was an independent but quasi-governmental company which was an
arm of Burmah Oil and the British Empire (PL01)(PL05)(PL08). [u&d : nxd pmp rfn tpt mkt=] It was organized to
find and produce
Persian oil. refine, transport, and sell it as fuel oil to the British Navy
(PL02)(PL04)(PL07)(PL012). It was a strategy quite different in geography, vertical
integration, product, and administration from any other Major. From these
commercial and national strategic purposes, the other policies follow [Greene.STRATEGIES:243-4].

The next period in BP's history [between WW1 and WW2] was marked by steady growth in its volume of business and
some additions to its geographical areas of activity. There was one major shift
in strategy (PL17): [u&d : pmp-mkt] to integrate vertically from production through marketing,
rather than simply produce and sell fuel oil to the Navy. The important
additions were production in Iraq and KWT, refining in Britain and France, and
joint marketing arrangements in Europe (R17)(R32) [Greene.STRATEGIES:244]

Having found oil in Persia, the company resolved to seek additional cns~ and find ii
elsewhere as well (PL16). This was partly due to its success in exploration (R08)
and partly to diversify its sources of supply to carry out its mission for Ihe
British Navy{PL04). It was also to reduce its dependence upon Persian politics
(PL15). which had become more difficult with the disputes cited above and less
predictable as the Shah and, with him, British influence became weaker (EC04)(EC05).
It may also be attributed to the far-sighted and global views of Sir John Cadman, who
became Deputy Chairman in 1924 (PV05).J9 The "interpretative" agreement
of 1920 (R20) cleared the way of obstacles [Greene.STRATEGIES:244]

In a defensive move it first attempted to secure the rest of
Persia but its efforts came to nought.

The events of war (EC39) brought great changes in the
company's environment but none in its strategy. Before the war a large expansion
intended for completion in 1943 had begun. [u&d#1=] Drilling continued in new fields
discovered since Masjid-i-Sulaiman in 1908: Naft Khaneh (1923). Haft Kel (1928),
Gach Saran, Agha Jari, Pa7_anun (gas), Naft Safid (all discovered after Haft
Kel), and Lali (1934) (R27c)." After Italy's entry into the war closed the
MDX.S, the "short haul" policy (EC40) adopted in mid-1940 to minimize
the danger from submarine attack meant supply from Venezuela and the U.S.
Persian production was cut from 234 TBD in 1938 to !30TBDin 1941 and Iraqi
production from 80 TBD (1938) to 30 TBD (1941)

10.4 Aftermath

Certainly they were men of talent with other accomplishments, but it is worth noting that
the upheaval in Iran did not produce a noticeable shift in policy or personnel.
Lacking evidence to the contrary, a plausible conclusion is thai their careers
offer indirect evidence of the continuation of their policies and inflexibility
which subsequent events have not tested. With majority ownership and director
representation the British government could have expressed its dissatisfaction
on this important strategic matter but it did not; nor did other shareholders.
Survival of the crisis, if anything, increased their independence from
government constraint. Shortly thereafter, with the Suez Crisis in 1956 (EC56),
British government influence (EC06) ended. Having been let down by the British
government, the company took steps to outgrow it.

For the company [BP] the story had a happy ending. [u&d#1=] Their response was to double their efforts
at what they did best, explore for oil (PL16). with results that were the envy
of the industry. Sir Eric Drake said. "The 1951 nationalization of our Iranian
properties seemed like a deadly blow at the time, but it caused us lo engage in
an unprecedented wave of new exploration. It turned out to be the freshest
breeze that ever blew through these corridors. I guess a nasty jolt every now
and then doesn't do any harm." Iran did not want to be dependent on them; they
did not want to be dependent on Iran either (PL15).

The search was world wide (PL16). In the Mideast BP
began exploring in the sheikdoms along the Trucial Coast in 1952 and made a
major strike in Abu Dhabi in 1958 (R58b). Two more fields, Magwa and Ahmadi
(R58c,d), were found in KWT the same year. In Africa they had begun exploring in
NGR in 1949 (R49c), made the first discovery there in 1953 (R53a), and began
export production in 1958 (R58e).** A small strike made in Egypt (Anglo-Egyptian
Oil Fields—15-1/2% BP)(R54d) was confiscated during the Suez Crisis (EC56) and
returned in 1959." BP was among the first companies granted cns~ in LBY
in 1955 (R55b) and in 1961 discovered the Sarir

field (R6la) in a joint venture with Nelson Bunker
Hunt." The acquisition of 42% of Triad Oil Company in 1953 (R53b) gave BP
leases in Alberta on which it developed production by 1955 (RSSc ??). In 1954 and
1955 it acquired interests in two companies with production in Trinidad (R54b)(R55d)

It made a discovery in Colombia in 1961 (R61b). BP explored in most of Europe, purchasing
a small field in Germany in 1958 (R58g)."'" It began exploring in the North Sea
in 1962 (R62) and has made four discoveries with p.rzv~ of 2b of the thirteen
billion barrels discovered to date, making it the largest holder there also. Only in the Far East has it been less successful than
other companies. Thirty years of searching in Papua (New Guinea) has yielded
only traces of oil, though small discoveries in NDN and Australia were
made in 1971 and 1972 (R7I)(R72).104 In addition to these successes it
has also explored numerous other places,

BP's success must be largely attributed to skill (R27c). The
number of major discoveries it has made exceeds what may be attributable to
luck. Neither does evidence on activity support a timing advantage from a head
start caused by the Iranian nationalization which might have allowed it to lock
up promising areas while other Majors were preoccupied with trying to market a
surplus of Mideast
nrg.pc. BP had more surplus nrg.pc than any of the others as a consequence of its
position in the Mideast and limited integration (PL09)(PL22). And others were
exploring worldwide at least as vigorously according to my data on capital
expenditures and numbers of countries in which activity occurred. Competitors
note the unusual independence allowed the exploration group at BP to take risks
and back commitments. One noted, "They seem to have a genius for finding large,
simple structures,"105 and he went on to note that they get in
quickly and get out quickly when results are discouraging. Looking for only the
largest structures is a luxury appropriate to a company with large resources elsewhere.

BP expanded downstream (PL17), predominantly in the
Eastern Hemisphere (PL18), as its nrg.pc supplies grew. It added refineries in
Northern Ireland. Germany (Ruhr), the Netherlands (Rotterdam), Italy (Turin),
Switzerland, Cyprus, Ivory Coast, NGR, Rhodesia, South Africa, Lebanon, and
Singapore (R60a)(R61). Nearly all these refineries were small, local market
refineries and nearly all were jointly owned. The use of joint ventures
reflected the effort to find outlets for its nrg.pc while limiting downstream
commitments (PL19). Longer than any other Major, BPcontinued to rely on its huge
source refineries in the Mideast. As late as 1960 at least half its products
came from its refineries in Iran, KWT, and Aden (PL07). In the next decade this
policy shifted as its nine large European refineries expanded to 2/3 of its total and

the Mideast declined to 1/5 (PL23).l06 In 1976 95% of its products were
refined and 85% marketed in the Eastern Hemisphere (PL18).'07

Marketing volumes have remained approximately even with refining levels and with similar
geographic distribution. In I960 56% of its products were marketed in Europe.1"9
By 1976 the proportion rose to 71% (PL18).Product distributions
are not given in BP's annual reports but it is likely they would show continued
reliance on fuel oil and wholesale marketing (PL04)(PL11)(PL19)(PL20). This one can infer
from the reliance on source refining (PL07) (lighter products are more difficult
10 transport and require market refineries), the products required by the
European market (more heavy fuel oil and less gasoline than the U.S.)(EC60).and
the limits on BP's commitment to refining and marketing measured by the
relatively small scale and partial ownership of its refineries and marketing
organizations. Also, after Europe, BP's second largest outlet, accounting for
23% of its product sales in 1960 and 10% in 1976, was the bunker trade (PL04)(PL20)."0

Another indication of BP's relative lack of commitment (PL09) lo refining and marketing
is that after Shell Mex-BP was dissolved at the end of 1975 BP was not number
one in any of its produci markets, even Britain, where its 16% was second to
Shell's 24% of the market.1" This contrasts sharply with its producing positions
where it is the leader in the Mideast, the North Slope, and the North Sea,

The downstream policies discussed above add up to a continuation of the policy of
the 1920s to use nrg.pc rather than cash to buy outlets for nrg.pc (PL19). This,
in turn, reinforces the strategy of a company primarily interested in finding
and producing nrg.pc (PL02)(PL09)(PL16). As refining and marketing lagged behind
production after the end of WW2 BP became the largest nrg.pc seller
(PL22). Between 1971 to 1974 it was selling as much nrg.pc to companies like Exxon [ID]
and Petrofina as it refined and marketed itself. It admits taking
downstream losses to move nrg.pc. The policy of moving the maximum volume of
nrg.pc (PL24) was pursued partly because profits were highest ai (he production
stage and often zero or negative in refining and marketing and partly to satisfy
the demands of the Arab governments. As Robin Adam, a BP managing director, put
it, "We were taking losses downstream in order to get out goods upstream because
that's what the Arabs wanted."111

An interesting question about the behavior of the Majors
during the 1950s and I960s is to what extent this strategy of moving the maximum
nrg.pc at minimum expense was profit maximizing or whether it was done at the
sacrifice of profit to keep the producing country governments happy or both. If
the path to maximum profit were lo move the maximum volume of cheap Mideast nrg.pc with the least
investment downstream, then BP should have been the most profitable Major. But
as shown in Table 11-5, it in fact has often been the least profitable since the
1950s. This fact may be explained by

any of several possibilities: (a) the maximum nrg.pc volume theory is incorrect and
downstream operations have not been unprofitable (as Adelman suggests);"4
(b) the theory is incomplete, having omitted possibly important factors like the
profitability of the U.S. gasoline market compared to the European fuel oil
market; (c) BP has been poorly managed; (d) BP's tax burden has been higher than
others; or (e) it suffered relatively more from the nrg.pc glut and price
declines in the 1960s,

Because of its relative weakness in refining, its abundant resources upstream, and its
nrg.pc moving rather than value adding strategy, BP was the last of the Majors to
make a significant entry in petrochemicals. Though it has had a joint venture
with The Distillers Company to manufacture basic petrochemicals at its
Grangemouth refinery since 1947, it did not make an entry comparable to other
Majors until 1967 when it acquired The Distillers Company (R67)."5

The same factors have limited other diversification, making it one of the least
diversified Majors. Its only other significant venture outside oil came in 1970
with the foundation of a subsidiary (R70b) to manufacture high yeast proteins
for animal feed in 1970."6

These downstream and diversification patterns are the logical conclusions one might
expect from a consistent set of policies beginning with selling fuel oil from
Persia to the Royal Navy. BP unobtrusively did what it does best, though less
profitably than others. Its latest, and probably most brilliant, strategic move,
entry of the U.S. market through acquisition of Sonic in 1970 for North Slope
nrg.pc, is a significant departure from the past.

[u&d#1=] Prior to its major discovery at Prudhoe Bay on the North Slope of Alaska. BP had
few
operations in the Western Hemisphere (PL18)(H05) and almost none in the United
States. It had obtained leases and some production in Canada by acquiring Triad
in 1953 and had built a refinery at Montreal in 1956. It had some production in
CLM. But it had not even explored in USA (H05).

Looking for outlets after the discovery in Alaska it bought (R69) 9700 Sinclair stations
from Atlantic Richfield for a S400 million note from ARCO in 1969. Then in 1970
it bought what will become (R70a) majority ownership of Sohio, a nrg.pc short
Midwest refiner and marketer (Standard Oil of Ohio), with (he first 600 TBD of
its North Slope production, acquiring a U.S. presence and a strong downstream
organization without spending a drop of cash. With a debt free balance sheet
Sohio can borrow to finance development of North Slope production and its own
purchase."7

[u&d] Even more amazing is that the Sohio purchase puts it well on the way
to becoming the sixth U.S. Major. After its Eastern Hemisphere rzv~ have been lost
through nationalization (EC76), it will be a vertically balanced U.S. and European
company with the majority of its assets in the U.S. by the 1980s.

Its [l&r u&d=] geographical, vertical, and product policies as well as its identity
(PL01)-(PL11)(PL13)-(PL15)(PL18)(PL19)(PL21)(PL24) will all change. It will have broken its last link
with the Empire. In the process it has rescued itself from decline. Perhaps it
will be renamed American Petroleum if the British government ever divests its
shares. This concludes the narrative of the strategy of British Petroleum. A
classification and summary of evidence for each policy is presented in Exhibit BP-1.

}m{

The strategy
of British Petroleum (BP) may be briefly summarized by four of its strategic
characteristics. [1] BP is a British and once colonial company,
an instrument of the British Empire, the only Major with government ownership,
and possesses a long and intimate relationship with the British government.
[2] It
is the founder of the Mideast oil industry and until recently its largest
pmper. [3] It is primarily an Eastern Hemisphere (Mideast/Europe) company and,
until its 1970 acquisition of Sohio for its North Slope nrg.pc rzv~,
[Big.crp.nrg] the only Major without a strong U.S. presence. It is also the
largest pmper in the North Sea. [4] It is the most successful [nxd] explorer for oil
in the world, the largest nrg.pc seller [mkt], and the weakest of the Majors
downstream [Greene.STRATEGIES:237]

}r{

*:LND,British Petroleum|BP Statistical Review of the World Oil Industry| Annual}s{
*1959:LND, Sidgwick and Jackson|>Longhurst,Henry|_Adventure in Oil: The Story
of British Petroleum|}t{}8{}

a{}b{}c{}d{}e{} |>Chase.bnk <>Chase Manhattan Bank| n{}o{}r{
*:NYC|Capital Investments of the World Petroleum Industry, annual
*:NYC|Financial Analysis of a Group of Petroleum Companies, annual}s{}t{}8{}

a{}b{}c{}d{}e{} |>Chv.crp.nrg <>Chevron
(>SoCal) [Std.chd | Std.CA] n{}o{7ss.lgc}g{
CF/TGZ.nrg}m{
Socal's difficulties after WW1 over price on the West coast [CF=BP when GrB bought over 1/2 of shares], the
post-WW1 fear of shortage led to the establishment of the Elk Hills Naval Reserve in California and a court
battle with Socal over its perimeters, and the U.S. Navy's attempt to buy into SaA in 1943 (see Chapter 7)
[Greene.STRATEGIES:241 and ch7]}s{}t{}8{}

The Royal Dutch/Shell Group (generally known as Shell after its seashell trademark) is the
result of a 1907 joint venture between the Royal Dutch Petroleum Company (60%
ownership) of the Netherlands and the Shell Trading and Transport Company,
Limited (40% ownership), a British company. As a joint venture with dual
nationality it has resolved the inevitable coordinative problems by
decentralizing authority geographically to its subsidiaries to a greater degree
than possibly any other Major (PL17)1. Decentralization was also a
response to [>DtdH] Sir Henri Deterding of Royal Dutch who, with [>SamM] Marcus Samuel
of Shell, was responsible for the joint venture and who ruled it with brilliance
and tyranny for nearly 30 years. Under DtdH, Shell was Standard's and later
Jersey's nemesis, the second largest oil company in the world.
[tntn tpt rfn] Multinational and worldwide from its beginning when it shipped refined
products in bulk from Russia and the Dutch East Indies to Europe and Asia, it
served its markets by taking an interest in every major producing area until
WW2—the Dutch East Indies, Russia, Romania, Mexico, the U.S.,
Venezuela, and Iraq—and matching low cost production with nearby markets.
This policy (PL06) contrasted sharply with Standard's practice until the late
1920s of serving its foreign markets primarily with exports from the USA [u&d#1=] It was
Shell's great misfortune (H03) not to share, except in Iraq, in the great
discoveries in the Mideast. It had to be content with long-term contracts,
principally with Gulf from KWT. Locked out of SaA, Iran (until 1954), and KWT,
Shell seemed to lose its expertise in finding oil after WW2 and has
gone to great lengths to attempt to regain it. This loss forced it to rely on
its large-scale, worldwide refining and marketing organization to move purchased
nrg.pc. Shell specialized in lubricants, jet fuel, gasoline, specialty products,
and service in the attempt to add value to nrg.pc and, partly as a consequence,
developed the largest position in petrochemicals among the oil companies
(PL02)-(PL08)(PL19)(PL20).

To summarize the development and present [1985] state of Shell's
corporate strategy I [Greene.STRATEGIES]
have drawn upon the expressions of Shell executives in a series of
interviews I conducted in 1976. which were the starting points for this
research tracing the origins and development of the patterns of behavior I
have chosen to call Shell's policies

Taken with the numerical data in Table I-I (Chapter I) they form a picture of
the Royal Dutch/ Shell Group which has had remarkable stability and success

||

Shell's products are still sold worldwide under a single name and
trademark (PL01). What began as a multinational operation between Russia,
Europe, and the Far East became worldwide after the 1907 amalgamation when
Shell soon entered the Western Hemisphere (PL02) and the U.S. to "attack Standard at home"

It is "the only true multinational"8* and is "not just an
American company spread abroad."

||

It began as a shipper, trader, and marketer (PL03)(PL04) even before it
entered the oil business

Today [1985] it is the largest shipper (Table 1-2). It has "at least
equal knowhow in trading/marketing business as in the oil business"

It is the largest trader with Eastern Europe today

At Shell "international trade is a way of life, not a novel experience"

It has long "bought oil by type rather than price"

As a retail marketer (PL04) "Shell always tended to go closer to the
final consumer than the competition in all product lines"

||

Shipping kerosene in bulk (PL05) rather than cases was an operation
requiring large scale from the start

For many years its wtpt~ "led the industry in size."''5 So
have its refineries and its chemical operations

Shell's scientists (PL12) are "good at finding low cost processes"96
which were often large scale

With large scale comes a volume rather than profit margin orientation

Its businesses were "growth oriented until 1973, and then profit
oriented just as in the 1930s

In these products and marine bunkers (PL11) and gas (since WW2 it has
found huge deposits of gas rather than oil in ALG, Brunei [formerly British
Borneo], the Netherlands and the North Sea), it has the leading position in the industry

With many of its Dutch executives today having graduated from the
Technical University at Delft, Shell is "proud of its technical excellence"
and spends "more on R&D than anyone," an interest which accounts for much of
its success in refining and chemicals (PL08)(PL19)

||

The prevention of price competition was DtdH's philosophy and Shell's
policy (PL13) in numerous cooperative market sharing agreements before WW2

They were intended to prevent the erosion of market share and
profitability through price competition

The motto on Shell's stations, "service is our business," continues to
express its view about price competition

Sometimes it has been "too slow to react downwards" on price and while
"market share was important" after 1973 Shell was "willing to shed volume"
rather than cut price

||

The two policies (PL14)(PL17) which define its relationships to its
subsidiaries are perhaps Shell's most distinctive features. Accommodating
individual and national differences

Shell has a planning staff of nine people of nine different nationalities (PLI4)

But while it will accommodate minority local partners, it will not take
a minority interest with a local partner

[stt&crp=] In contrast to the American Majors who believed in never
having a close relationship with a government Shell is "close to the needs
of governments and consumers — serving the energy needs of the state."

Its policy is to "adapt not fight. It "optimizes locally from each
country's point of view.

Its subsidiaries are "more prepared to be part of the countries in which
we operate than are others

It has not so much an overall strategy as "100 motherhood strategies
with Shell and Royal Dutch acting as "doting parents

It seems clear that Shell is more willing than others to make cns~ in
economic efficiency to respect local preferences, a strategy designed to
increase its long-term political "acceptability"

||

Diplomacy, openness, and public service (PL15)(PL16)(PL18) also aid the
pursuit of acceptability

"Shell is the least disliked foreign company where it operates."

The expression of favorable judgment for people and ideas is that they
are "considered sound"

Whereas many of Shell's Dutch managers have technical backgrounds, its
English managers are typically hired from liberal arts backgrounds directly
from university or private school, one important selection criterion being
that they are "good mixers with social and political skills"(PLl5)

They then usually spend one or two years in the central office learning
the business and are then posted abroad to operating companies

Today there is also a substantial flow of native managers from operating
companies posted to headquarters to become "group minded" and more importantly to establish
personal relationships with managers in the central offices

The principal tool of management even in the usually centralized finance
function is not control but to "know people well," making a point of seeing
them whenever they visit the central offices

As a result "all big companies are envious of Shell personnel loyalty,
dedication, and cooperativeness"

The development of personnel has always been exceptionally important at
Shell and was a particular interest of Sir Frederick Godber

Shell's openness (PL16) continues to stand in stark contrast to the
habits of most European companies who, until recently, "had to be pushed to
admit that they were in business at all. One could read their annual reports
without knowing whether their products were nails, furniture, or bordellos"

[mlf=] Shell has had an "always high code of conduct" and has not been
involved in banking or bribery scandals

It "would love to think that virtue shows up in profits" (PL18)

What began as a commitment to serving the British Empire became a policy
of public service generally (PL18)

In 1976, as shown in Table 1-2 (Chapter 1), Shell is still the second largest Major, nearly
as large as Exxon [ID], with the largest fleet and a 60% exposure
[Greene.STRATEGIES:209/210]
downstream to the Eastern Hemisphere. Also shown in Table 1-2 are the policies described
above: decentralization, nrg.pc shortage, position in chemicals, and product mix.
Other than chemicals Shell's principal diversifications are metals through the
acquisition of a Dutch multinational metal firm and a half interest in the
losses of Gulfs General Atomic subsidiary. The strategies of Exxon and Shell are
perhaps more similar than those of any other two Majors in their global scope,
vertical emphasis on refining and marketing, and degree of decentralized
management. They show that some degree of homogeneity of strategies is possible
among competitors from different origins and circumstances. But there are also
differences, with Shell being weaker in production but stronger in retail
marketing, lighter products, chemicals, wtpt~, and in the Far East and with a
more locally autonomous. indigenous organization (PL03)(PL04)(PL05)(PL07)(PL10)(PL11)(PL19)(PL20).

9.2 The "Group"

To understand Shell's strategy one must first understand
its organization. As with BP.crp.nrg ID there are
significant differences from what American readers at least will regard as the
norm for the top echelon of the organization. The usual pyramidal organization
composed of layers of vice-presidents of varying degree heading the operating
divisions and culminating with a chief executive and board of directors who meet
monthly is absent. In its place are two parent companies, the Royal Dutch
Petroleum Company and the "Shell" Trading and Transport Company, Limited, each
with its own board of directors. The Dutch and British parents hold stock in a
60:40 ratio in two holding companies, one Dutch, the other British, both called
Shell Petroleum more or less. These two holding companies hold stock in equal
amounts in some 500 operating companies and ten service companies. Top
management of the Group is composed (in 1976) of eight Managing Directors and
below them a number of geographical and functional Coordinators. "Managing
Director" is a nineteenth-century European title (EC02) for the chief executive who manages
a business for his investors. The Committee of Managing Directors is headed by a
chairman and a vice-chairman. This organization is partly European, partly
post-Colonial, partly McKinsey, and partly expedient. It is distinguished from
its American competitors by being a joint venture with unequal partners, two
nationalities, and an unfamiliar management structure (EC01)(EC02).

The parent and operating companies seem more familiar.
The "Shell" Trading and Transport Company, Limited is a British company whose
shares, traded publicly, are almost entirely held in the U.K. The Royal Dutch
Petroleum Company is Dutch. Its shares are traded widely with a majority held
outside the Netherlands. But by law its chairman and directors are Dutch.
National identities are preserved by design (PL14). The operating companies are
geographical and functional units, some vertically integrated within a
[Greene.STRATEGIES:210/211] geographical area.
They are not all wholly owned. Many are joint ventures with other
companies or governments. Some, like the Shell Oil Company in the U.S., have
minority interests. Operating companies have their own subsidiaries and boards
of directors.

The ten wholly owned service companies—oil (2), chemicals (2), marine (I), metals (I),
nuclear (I), gas (I), coal (I), and research (I)—conduct the activities in the
Group that are not decentralized (PL02). In oil these are exploration, group
finance, oil purchase, sale, and transportation to and from operating
subsidiaries. Coordinators orchestrate these movements.

The Royal Dutch/Shell Group is a group of companies, not a corporation. The Shell Centre
complex in London and the offices in The Hague are its central offices, not
corporate headquarters. The operating companies are coordinated, not managed, by
the central offices. By the tax laws (EC03) of the U.K. and the Netherlands, if
they were managed by the central offices, their profits would be taxable in the
home countries of the owners. So for reasons of dual nationality and tax
liability the decentralization of operations, most often geographically by
market (PL17), is not a facade. It is a particularly important issue for
executive compensation.

On the other hand Sampson's sly suggestion that if an observer went up to the "bridge" of the
leviathan he would find no one there" clearly understates the role of the
central office and the eight Managing Directors. The chairman of the Managing
Directors behaves just as he would if he were the chief executive.3
"Coordination," if it is less than management, where profit responsibility can
be assigned and taxed, is much more than an advisory, technical service role. It
is, perhaps, indirect management. Daily operations are not controlled from the
central offices. The authority to turn the valves to change product mix at the
Curacao rfnery does not come from the central office as it might in other
companies. Neither does a central computer in Chicago make out all pay checks
worldwide. Instead the tools of coordination are personnel assignment, planning,
and internal competition.

Compared to Exxon [ID] where decentralization is more on
a regional basis with tighter control within each region. Shell's decentralization
(PL01) seems to be more on a country basis with more emphasis on local management to
the extent that in many places it is viewed as a local company rather than a multinational
giant. The British think it is British; the Dutch think it is Dutch; the Americans think it
is an American oil company with foreign subsidiaries.4 And while in some areas
it is more decentralized than the other major oil companies, it is perhaps more centralized,
as all oil companies are, than other European multinationals like Unilever and Nestle.

Shell's policies of geographic decentralization (PL17)
and emphasis on the preservation of national identities of all units, not just
the British and Dutch, (PL14) are the result of its organization shaped by its
joint venture status, unequal ownership, dual nationality, the tax laws,
European models of [Greene.STRATEGIES:211/212]
management, and a reaction to and desire not to repeat DtdH's tyranny (PV14). The
disadvantages—inefficiency and overstating—inherent in this organizational
structure (H04) are greatest in upstream areas where, not incidentally. Shell
today is weakest. They are smallest in marketing where Shell is strongest. As
expected it has generally ranked before 1973 among the lowest of the Majors in
profitability of its operations since WW2 (though because of its size
its net income has traditionally been second largest).1

However, on another increasingly important scale, political acceptability, it must be ranked
at the top. The considerable effort at Shell in diplomacy required to coordinate
and preserve national identities has yielded an advantage in political
acceptability and therefore long-term viability. Shell has rarely drawn
criticism or been confused with Std.crp.nrg. It has avoided political
controversy and concentrated on serving its customers, a consequence of its
multinationality and a position that Churchill recognized as long ago as 1914.7
Its diplomatic style of management (PL15) and the indigenousness of its local
subsidiaries (PL17) are greater strategic investments in political
acceptability, if lower in profitability, than other Majors have chosen to make.
In these aspects of its organization and strategy Shell differs from the other
Majors. It is the United Nations of oil companies, as that body wishes it could
function. What follows is the story of its development.

9.3 Formation: Shell before 1907

The story of Shell in its earliest years is not told here
for the sake of historical completeness but because, as is also true of the
other Majors, many of its most important policies today date from these early
years. These include not only its organization discussed in the previous section
but also [l&r] its worldwide multinational character (PL02), its geographical
strength in the Eastern Hemisphere (PL07 PL08), [u&d=] its vertical emphasis on
marketing and shipping (PL03)(PL04)(PL05), the policy of vertical integration by
geographical area (PL06), and its brand name and trademark (PL01). The first
link between the partners of the Royal Dutch/Shell Group was forged in 1903 with
the formation of the Asiatic Petroleum Company (R03). The motive was to survive
and prosper against the price cutting of Std.crp.nrg in the Far East. [DtdH
SamM PRS.Rth=] The link was forged by Henri Deterding, the
Managing Director of Royal Dutch and the possessor of the finest commercial mind
ever produced by the Netherlands (R96a). The three equal partners were Marcus Samuel's Shell. Deterding's Royal Dutch,
and the Paris Rothschilds, who supplied Russian kerosene to Shell and Royal
Dutch." Asiatic was to combine the marketing organizations of Shell and
Royal Dutch and market the kerosene of its three partners all over the Eastern
Hemisphere (PL03)-(PL05).9

The "Shell" Trading and Transport Company (PL01)(PL03) was the
creation of a Jewish trader SamM (PV01)(PV02). His father, also Marcus
[Greene.STRATEGIES:212/213]
SamM, had begun with a small antique, curio, and bric-a-brac shop in the East End of
London in 1833, including geegaws (EC04) for the Victorian household made from
oriental seashells. The trade in shells became so profitable that he arranged
for regular shipments from the Far East, and developed it into a general
import/export business. In 1878 his son took over and not long after began to
carry consignments of cased kerosene for "the lamps of China" as a sideline to
the shell and general merchandise trade.'" From the (R78) seashell trade came
Shell's name and trademark (PL01), its experience with [l&r] worldwide
multinational commerce (PL02), and its interests in shipping (PL03), trade and
consumer products ([u&d#1=]retail marketing rather than discovery or manufacturing)
(PL04). These policies were part of Shell's strategy before it entered the oil
business, which it did through its principal businesses, trade and transport
(R80a-d),

[Nob.crp=] In 1890 on a trip to the Far East SamM saw some of the
first oil wtpt~ being operated on the
Black Sea by the Nobel brothers' interests. Realizing the economics of bulk
transport (PL05) compared to Standard's method of shipping Pennsylvania kerosene
in metal cases by clipper ship, he secured a ten-year supply contract from
Rothschild interests in Russia (R92a) and ordered eight wtpt~ (R92b) for shipping Russian kerosene in bulk eastward
through the Suez Canal to the Far East (PL S??). He had difficulty in securing
permission to send wtpt~ through the canal, partly due to the Standard
interests he had outmaneuvered and partly because of the genuine fear that the
new wtpt~ were floating bombs. In 1892 the Murex, followed by the
Conch,
sailed through the Suez Canal to the Far East (EC06) and into
competition with both Standard and the Dutch producers in the Dutch East Indies.11
Bulk stations and a marketing network were built throughout the Far East (PL07),
but the venture almost failed for lack of demand. Customers were not willing to
use their own containers for bulk oil, desiring the blue Standard tins as much
as the kerosene. Bright new red Shell tins locally manufactured were soon
competing with battered blue Standard tins which had traveled halfway around the
world.13

The precedents set by this entry all became important parts of Shell's strategy.
Shell entered the oil business as a trader, shipper, and marketer of kerosene
(PL03)(PL04)(PL05)(PL07), purchased from low cost Russian sources (PL06), and
transported in bulk to the Far East (PL05)(PL07). This strategy was shaped by
shipping and Far Eastern trade (R02)(R03), the availability of low cost Russian
nrg.pc which made inexpensive, low quality kerosene (EC07)(EC08), the invention of the
wtpt (EC05), use of the Suez Canal (EC06), and the competition of Std.crp.nrg
(EC09).

[Shell.crp.nrg=] The Royal Dutch Company for the Working
of Petroleum Wells in the Dutch East Indies was formed in 1890 to develop an
oilfield (R90) in Sumatra [NDN nrg.p.ggr]. Under the management of J.B. August
Kessler a ptpt and a rfnery at Pankalan Brandan began operating in 1892 (R92c).
The business of Royal
[Greene.STRATEGIES:213/214]
Dutch was producing and refining in [NDN] the Dutch East Indies (PL08) [good pmp & rfn, but mkt?=]. But it had difficulty
with marketing (H01). Kessler hired a young banker and accountant (PV03), DtdH, in 1896, to get, as Deterding put it "...a man whose mind would be
sufficiently free from the production bias to enable him to concentrate more
readily on the selling end."14 Deterding began building wtpt~, bulk
storage points, and a sales organization in the Far East (PL09), getting his
start in marketing (PV04).15

SamM's reply was to finagle a cns from the Dutch (R96b) on Borneo in 1896. He
struck oil and started a rfnery at Balik Papan (R96c,d) (PL09).16
Almost from the beginning both Shell and Royal Dutch found it imperative to
integrate vertically from production through marketing (PL09), Shell to assure
low cost sources and Royal Dutch to survive price cutting. By 1897 SamM's oil
business had become so extensive that he formed a separate company (R97), the
"Shell" Trading and Transport Company (PL01)(PL03)(PL04) to operate it. He also
contracted for supplies of a nrg.pc suitable for making gasoline (R98) from a
small independent field in Sumatra, adding a second product (PL10).17

The power of the British Empire (EC11) at the turn of the century, the last year of
Victoria's reign, was at its zenith in form if not in substance. Germany, with
the Prussian army, dominated the Continent, but Britain with her navy dominated
the world. Between 1895 and 1899 British merchant ships carried 70.8% of world
sea trade.18 In 1898 SamM was knighted for services to the
Empire for donating the services of a Shell ship to free a Navy warship that ran
aground in the Suez Canal.19 The following year he first formally
tried to persuade the Navy to test oil as a fuel, the fuel his own fleet used.
With Lord Fisher at the Admiralty, SamM pioneered the use of oil as marine fuel
(PL11). For the next 15 years they tried to get the Navy to convert to oil. It
was SamM's lifelong dream for Shell to fuel the British Navy, the backbone of the Empire,
with oil from its bunkering stations worldwide (SR01)(PV05)(PV06)(PL11) in its days of
glory. He even offered control of Shell as Disraeli had taken control of the Suez Canal
for Britain.20

SamM was fulfilling the wish in his father's will that his sons "be united, loving and
considerate and keep the good name of Marcus Samuel from reproach" (PV06)(PV07).21
Of humble origin and Jewish (PV01)(PV02) all his life he sought acceptance for
himself and his family from aristocratic Anglo-Jewry and the Empire more than
wealth (PV07)(PV08). An alderman in London since 1892, he became the third Jewish
Lord Mayor of London in 1902-1903, the pinnacle of his civic career.

From 1897 to 1901 his business empire also reached its
peak. In 1900, bolstered by production in the Dutch East Indies (R96c), he
renewed favorably the Russian purchase contract with the Rothschilds (R92b).
Shell expanded everywhere and determined to market gasoline in Europe by
purchasing a German company from the Deutsche Bank (ROla), cracking the armor of the
[Greene.STRATEGIES:214/215]
Std.crp.nrg, N.crp.nrg, and Rth INX~ who controlled the mkt there.I3 [u&d#1=]
When oil was discovered at Spindletop in Texas in 1901 [ID],
SamM contracted with the J.M. Guffey Petroleum Company (forerunner of Gulf) to purchase,
transport and distribute Texas oil as fuel for ships (PL06)(PL11). Shell would take up to
half Guffey's production for 21 years at 25c/bbl. plus 50% of the net profits
(ROlb), terms quite similar to those between Gulf and Shell in KWT in 1947.
Spindletop alone could produce [pmp] as much oil as Pennsylvania -- half U.S. output -- and
Shell had access to it.23 Standard's monopoly could be broken. Shell
ordered still more wtpt~. At the end of 1901 SamM's Shell was Britain's
largest oil company, second only to Standard worldwide, poised to enter Europe,
and the only company with worldwide sources of nrg.pc (PL06). His oil business
was barely ten years old.

But SamM's moment of power passed as adverse circumstances accumulated.24 By
1907 he had lost control and 60% ownership to DtdH and Shell.crp.nrg
which was I/10 Shell's size in 1901. The difficulties began in 1899 with a
Standard-Nobel-Rothschild (EC10) alliance in Europe that threatened to spread
worldwide and extinguish Shell. SamM expanded feverishly and took on large
inventories at high prices in the rising market. Talks to ally with Dutch
producers in the East Indies, including Royal Dutch, were inconclusive, as they
had been in 1896, partly due 10 the breakout in 1899 of the Boer war in South
Africa between British troops and Dutch settlers (EC13). In 1900 a slump began
(EC12). Shell was caught with high priced stocks as prices fell. The aftermath
of European intervention in the Boxer Rebellion in 1900-1901 cost Shell its
markets in China (EC14)." In 1902 the Navy tried fuel oil with obsolete burners
with disastrous results (EC15) and stuck its head back in the sands of tradition
and declined the use of oil.J* Also that year the British government
of India (then a colony) refused to grant Shell a cns in Burma or relief
from tariff on products of non-British companies in the mistaken view that Shell
was not wholly British, an insult SamM never forgot (EC16)."' This gave the
BurmahOil Company a monopoly in India as Shell, Standard, Royal Dutch and others
lost their markets there. The idea that Shell was or might become "foreign" came
after SamM rejected Standard's second attempt to buy Shell in 1901 (EC17). To
weaken Shell Standard then began the rumor that it
secretly controlled Shell.'8 In 1902 Spindletop went dry (EC18) and
half of Shell's fleet was idled. It began shipping kerosene from Romania to
Germany to keep its four largest wtpt~ employed.w Sir Marcus's
civic duties as Lord Mayor left him little time for business in 1902-1903 and
the small family management was unable to cope in his absence.10

Meanwhile Royal Dutch was emerging from rough times [that began in 1898].
[Greene.STRATEGIES:215/216] [...]

217=

The Asiatic Petroleum Company, with SamM as Chairman and DtdH as Managing
Director, was to be the eastern wing of SamM's vision with the Guffey contract
supplying his European distributing organization as the western wing." With
Spindletop dry (EC19) and Shell's Far Eastern facilities constrained by the
Asiatic partnership with DtdH, Shell's fortunes suffered. A trade slump
from 1903 to 1906, a price war by Standard initiated in Europe in 1904, the
Navy's refusal to grant Shell fuel oil contracts, and DtdH's control of the
Far East forced SamM to the position of having to withdraw from Europe and
forfeit the heart of his fleet to the Deutsche Bank. In desperation he opened
the question of amalgamation with Royal Dutch, offering equal terms as in
Asiatic. But DtdH insisted on nothing less than 60:40 and SamM, in
defeat, accepted in 1907. Now Shell was "foreign" and his dreams of supplying
the Navy with fuel oil were shattered (PL11)(PV05)(PV06). He felt himself a failure
but blamed no one save the government and the Admiralty, for their
short-sightedness, and to whom he would gladly have given control of Shell to
keep it British and be of service to the Empire (PV06).

SamM, though Chairman of Royal Dutch/Shell, began a brief retirement. But it
was not victory over or control of Shell that DtdH and the Royal Dutch
wanted. As much as its assets and markets they desired headquarters in London,
access to its capital markets and association with the British Empire—Shell's
Britishness.'10 DtdH had moved to London in 1902 to set up the
Asiatic and had become more British than the British. It was Shell which
imparted its name to the group and its products (PL01),

The amalgamation worked out differently than SamM expected.Jl In
fact it had brought together a great management team, something neither Shell
nor Royal Dutch had ever had separately. Besides Sir Marcus from Shell and his
brother Sam, there was Robert Waley Cohen, a Cambridge educated chemist from the
Anglo-Jewish aristocracy (PV08) who 1 became DtdH's right hand
man; Mark Abrahams, a nephew who had built Shell's organization in the Far East;
Walter Levy, a son-in-law (PV07), and others. From the Royal Dutch there came
Hugo Loudon, an aristocratic diplomat who had begun as Kessler's driller in
1894, for whom the respect of everyone was so great that he made the
amalgamation function smoothly from the start4" and whose personality
set the style of the organization (PV09, PL15), a level of courtesy no visitor to
Shell can fail to admire today. There were Dutch scientists and geologists
(PL12). And as Managing Director there was a genius, DtdH. With DtdH's deft
hands at the control of operations SamM was recalled
to active duty as elder statesman, counselor on policy, and public spokesman for
the organization.

An unexpected result of the system of management Loudon
put together was a lack of tension between the British and Dutch.'11
The two parent companies became holding companies owning shares in all the
subsidiaries in

218=

the proportion 60:40. A production-refining operating company was set up in The
Hague and a transport-storage company in London, reflecting the respective
national specialities (PL03)(PL08). Management tended to collect in London because
of its preeminent position in world trade. There was little Dutch consciousness
of their controlling majority. Perhaps because they were conscious of their dual
nationality they were careful to make ability, not nationality, the
qualification for a post. If tension arose, it was between London and The Hague,
but not between British and Dutch (PL14). This policy produced a remarkable
degree of accommodation and respect for national and individual differences
which is very evident today.

Royal Dutch and Shell shared an important policy, the "policy of the straight line,"
DtdH called it,'1'1 from ihe pre-1907 era (PL06). At
Royal Dutch it evolved in response to Standard (EC09). The advantage of Royal
Dutch over Standard, which purchased, refined, and exported its products from
America to the Far East, was that it pmped its own oil and its production was
much closer to its markets. To combat price cutting it resolved to deliver on as
straight a line as possible, serving only those markets nearest its production.
It was the same simple commercial principle of seeking the nearest source of
supply to match a local demand (PL06).45 This principle was to guide
Royal Dutch/Shell's worldwide expansion.

9.4 1907-1929: Worldwide Expansion

The years which followed the amalgamation were Shell's golden years under DtdH. Shell
expanded worldwide geographically in all functions and became a Major. Important
policies of openness (PL16) (in contrast to Standard's secrecy), subsidiaries
organized by country as indigenous parts of the local economy (PL17). service to
the British Empire (PL18). and in the I920s interests in petrochemicals (PL19)
and specialty products (PL20) were initiated. Large scale, volume and growth
oriented marketing became more important (PL04)(PL05).

Shell expanded vigorously worldwide after 1907. [u&d#1=] It explored and discovered oil in
British Borneo (1910). Mexico (1913), and Venezuela (1914). It acquired
production in Romania (1906). Russia (1919), Egypt (1911). Trinidad (1913). and
California (1913) (R06)-(R14).4" A different source places Egypt in Ihe
discovery category, citing a personal interest by Sir Marcus in the area from
1907 because of its strategic location on the Suez Canal and because it was
within the British Empire. He never gave up on his dream to serve the Empire
(PV06)(PL18). Had the Anglo-Egyptian Oil Company had large production it might
have furthered his dream.

Shell was the first oil company to seek worldwide production. One reason was the
technological edge its geologists had over the practical oil men used by other
companies (PL12). Integrating vertically by geographical area was an

219=

application of its policy of the straight line (PL06) to minimize costs. Having its own
production also, as MlnWL of Gulf concluded,48 prevented Standard
from squeezing it with high nrg.pc prices as SamM had experienced in
Russia in 1905 (EC02).J9 Geographical expansion also made Shell less
vulnerable to local price cutting by Standard (EC02),

Entry into the United States was the most important phase of this expansion and one that
was absolutely necessary to deny Standard a secure home base from which it could
finance price wars elsewhere. This expansion reflected the view of DtdH,
who saw Shell solely as a business engaged in selling oil (PV04)(PV1O) worldwide
(PL02) against Standard, as compared to Sir Marcus who sought Shell's greatness
by fueling the Royal Navy and appending Shell to the British Empire (PV05)(PV06). A
geological survey was carried out in Oklahoma in 1908. but the entry really
began after a marketing truce (PL13) from 1907 to 1910 (EC20) broke down. During
that truce Asiatic had sold Standard excellent Sumatran gasoline (R98a) which
was marketed in California.50

About this time, a famous story goes, DtdH made his first sales in America by sending
Shell wtpt~ filled with gasoline steaming past the Statue of Liberty in New
York harbor and dumping them at low prices on Standard's doorstep. DtdH
confirms the facts but insists there were only two ships which had been diverted
from Germany in search of better prices in the ordinary course of business and
that Shell did not at that time intend to begin marketing in America. But
neither he nor Standard were unaware of the competitive threat implied.

Shell's actual entry began in 1912 with formation of a marketing (PL04) company, the
American Gasoline Company, in Seattle (R12b) and secret purchase of producing
properties in the mid-continent which became (PL09)(R12b) Roxana Petroleum
Company later that year.'" These events occurred after negotiations with the
Mln~ of Gulf [MlnWL kin] to form a U.S. marketing combine did not pan out. In
1912 Standard dropped the price of gasoline from I8c to lOc a gallon in
California, while maintaining the higher figure elsewhere in the U.S. Unable to
sell its high quality Sumatran gasoline profitably in California on its own.
Shell began looking for a source of production which could supply gasoline more
cheaply by saving shipping charges, the policy of the straight line (PL06). In
1913 DtdH purchased large production in the Coalinga field in California
(R13a).

Due to its joint venture character (R07) and the
diplomacy required to manage such an organization (PL15), its worldwide scope of
operation (PL02), the policy of the straight line (PL06) to minimize long supply
routes, and the aim of live and let live toward partners and competitors (PL14),
the Royal Dutch/Shell Group took a different attitude toward the management of
its subsidiaries and amalgamations than most companies and one certainly
different than that of Standard whose subsidiaries, though they had some

220=

managerial autonomy, were viewed locally as tentacles of the worldwide ictopus and over
which there was little local control. The Shell policy set forth by DtdH in
1911, and for which he was responsible, was that the local Shell ubsidiary for
each country should be, though ultimately and distantly controlled by the Group,
an integral part of that country's economy and an instrument of its social
welfare (PL17)(SR03).53 It was, and is, a policy aimed at cooperation
and acceptability rather than profit maximization and control.

Another of DtdH's policies in great contrast to Standard's secrecy, secret companies,
and secret deals was that of openly stating Shell's intentions md policies
(PL16). Compared to the perfunctory annual reports of most American companies
before the 1930s, which were rarely more than a balance sheet and sometimes an
income statement, DtdH's reports to his shareholders were models of
lucidity and candor, compared even to the present, often running as long as 40
pages. Shell's intention to enter the U.S. was published in the Oil and Gas
Journal on April 12, 1911, eighteen months before it occurred.54

Between 1911 and 1914 Lord Fisher and SamM were making some headway in converting
the Navy to oil with Churchill's assistance.55 But the old
suspicions, ever since the Burma incident in 1902 referred to above, prevented
it from becoming the Navy's chief fuel oil supplier, though it was Britain's
largest oil company. It was to lose that honor to BP.crp.nrg [ID]
.56 An oil shortage and high prices for which Shell was blamed (EC21) were partly
at fault, but the main reason was inability to guarantee price and secure supply in
long-term contracts. Churchill expressed the government's policy when he charged
Fisher in 1912 to "find the oil: to show how it can be stored cheaply: how it
can be purchased, regularly and cheaply in peace; and with absolute certainty in
war.... "57 On the issue of price Churchill attacked Sir Marcus
personally in the House of Commons in remarks that were politically shrewd but
anti-Semitic, with the result that the government bought BP and Shell lost out
(see Chapter 10 for details).

When war came, however, Sir Marcus had the opportunity to
prove (PL18) Shell's loyalty and realize his dreams of fueling the Navy and
appending Shell to the British Empire (PV05)(PV06).58 He declared that
Shell would make no profit from the hostilities and turned over Shell's fleet of
75 ships to the government while having to charter neutral ships at four times
the rate it received from the government. The Dutch, who were neutral, consented
and DtdH executed it brilliantly. Twelve Shell ships were sunk, including
the Murex, which had first traversed the Suez Canal with bulk oil for the
Samuels in 1892. During the war Shell regarded itself as a government agency
committed to winning the war rather than as a commercial concern. All this is by
way of tracing the wartime origin of an important Shell policy, derived from
Marcus Samuel's dreams (PV05)(PV06), to be of service to the British Empire (PL18).
It is a very important part of the identity of Shell today as Sampson wrote in

1975 of the recognition of Shell executives as a kind of "junior diplomatic service."59
Sir Marcus's dreams came true.

After the
war Shell continued its worldwide expansion (PL02), especially in production
[pmp] (PL08), under DtdH's management (R96a). In 1918 it was already the world's
largest pmper (Table 1-3, Chapter 1). In the Eastern Hemisphere its Romanian
properties were destroyed willingly during the war (1916) to prevent German use
and soon after (EC22) the Russian producing properties it had purchased from the
Rothschilds in 1912 were confiscated. But production was increased in Sumatra
and a rfnery built at Sarawak. In the Western Hemisphere rfneries were built
at San Francisco (Martinez—1915), St. Louis (Wood River, 111.—1918), and Curacao
(1918) in the Netherlands Antilles (R15)(R18). In 1919 Shell purchased Lord
Cowdray's "El Aguila" (Mexican Eagle Oil Company), Mexico's largest pmper,
and in 1920 set up a joint venture in Britain with BP called Shell-Mex/ BP to
market the products (R19)(R20).60

Shell led the way into VNZ, purchasing cns~ from General Asphalt and others
in 1913 and [u&d#1=] making the first discovery (R14) at Mene Grande in 1914.61
It was the crowning achievement in the careers of DtdH and the Dutch
geologists (PL08)(PL12). In December 1922 the Los Barossos well in the Maracaibo
Basin blew out at 100tBd (= thousand barrels per day) and VNZ production began
to climb, always led by Royal Dutch/Shell until nationalization in 1976. For
nearly half a century VNZ was Shell's largest source of production,

Shell was well balanced [u&d] vertically as well as
geographically (PL09). It refined a little less than the 83tBd it pmped in 1918
(some nrg.pc used for fuel oil was not refined) and mkted a little more (from
supply contracts before WW1 with Russian and Romanian pmpers and after WW1 with BP—it was BP's
first customer). [autos=] Shell rose with the demand for gasoline (EC23)(PL10) from
Sumatran, Oklahoma, and Venezuelan nrg.pc~ marketed in the U.S. and Europe and
fuel oil (PL11) from Mexican, Californian, and Persian nrg.pcs sold to ships,
railroads, and power generating plants everywhere. It had the largest fleet
after the breakup of Standard in 1911 as it does today (PL03)(PL11).62
In 1976 it finally surpassed Texaco as the leading US gasoline marketer (PL10).

Other events of the 1920s were less dramatic as Shell
steadily expanded. [u&d#1=] It made a major discovery of the Signal Hill field near Long
Beach, California in 1921. In 1922 it merged its organizations in the U.S. West
and Midwest with Union of Delaware, overextended in the 1920-1921 recession, to
form Shell-Union (R22c) owned 72% by Shell and 28% by Union. Union's main assets
were not in the East but in Oklahoma and California, including an option on a
large block of Union Oil of California stock. It also gave Shell access to
American capital markets and placed owernship in Shell subsidiaries in local
hands, an important way of making Shell indigenous to the local economy by

222=

giving its citizens a share of ownership (PL17). Also in 1922 cns~ were acquired in
Argentina and a company was formed lo acquire oil rights in Brunei, British
Borneo (R02a,b). Shell Company of Canada was formed in 1926 (R26a). TRK.crp.nrg, in which Shell had had roughly a quarter interest since 1912
(R12a).
struck oil in Iraq in 1927 (R27). In the U.S. Shell expanded rapidly, becoming
the second Major (after Texaco) to market nationwide in 1929 (R29). While nearly
half its business was now in the U.S. abroad it was the largest pmper, rfner,
and mkter, especially strong in JPN (64% market share in 1935) IND. EEUR WEUR, with
wrl-wide volume nearly equal to Std.crp.nrg.NJ's (see Table 1-3 1927, Chapter I).
In 1928 it formed joint marketing ventures wilh BP in the Near East and Africa
and with BMH.crp.nrg in IND to market their products (R28a,b). G/Achnacarry. With
his joint ventures, geographical coverage everywhere (PL02), and these cxx
agreements, DtdH had. on paper at least since they never worked very well,
nearly achieved his objective of limiting competition (PL13)(PV11) and sewing up
foreign markets with Shell.crp.nrg as the world leader. As he had taken as the Group's
motto upon the formation of Asiatic in 1903. "Our field is the world"(PL02).

Its product line expanded in Ihe 1920s as well. It set up an (R20a) aviation department to
fuel KLM Airlines in 1920 (PL20), eight years before Std.crp.nrg.NJ did so. Diesel
fuel, home heating oil. lubricants, and asphalts became significant businesses
in the 1920s (PL20, R20b-e). With these additions came a marketing-oriented
dedication (Pl.4) to a full product line and strength in specially products
(PL20). in contrast to Std.crp.nrg.NJ even in those products whose volume was low. They
also represented a desire by the frugal Dutch to minimize waste and by Dutch
chemists (PL12) to apply science to upgrade products to their highest value. The
Shell Development Company (R26b), a patent licensing and research company
(PL12), was founded in 1926. In 1977 Shell was the world's leading lubricant
marketer with 23% of the market/6

What would in time become the largest petrochemical
company among the Majors [Big.nrg.crp] began with the founding in 1929 of Shell Chemical
Company (R29b) to produce ammonia from refinery gases. The reasons were not only
Dutch frugality (PV12) and scientific interest (PL12) but also oligopolistic
response to Std.crp.nrg.NJ, which had been trying to manufacture isopropyl
alcohol since 1920, and I.G. Farben (EC24)(ED25), the German chemical giant who was
already coming close to producing a synthetic gasoline from coal (and would do
so in 1934)."' DtdH decided that if Farben could enter the motor fuels
business with German scientists, Shell could enter chemicals with Dutch
scientists (PL12).68

It was nearly at the beginning of the organic chemicals industry. DuPont, an explosives
manufacturer, entered chemicals in 1917, Union Carbide and Allied Chemical in
1920, I.G. Farben in 1925, and Imperial Chemical Inc. in 1926. Feedstocks were
initially coal and coal tar but the gas, coal and steel companies which produced
them were uninterested in small volume chemical operations, thus permitting the
chemical companies to grow on their byproducts. Petroleum feedstocks from
refinery wastes were desirable because of their greater purity, but the oil
companies still nearly missed the boat. Even Shell Chemical today, the 13th
largest chemical company, is only half as large as the top five chemical
companies.69

With the commitments to petrochemicals and specialty products (PL19)(PL20),
particularly asphalt, lubricants, and aviation fuel, and with the achievement of
nationwide U.S. as well as global market coverage (PL02), DtdH's edifice was complete.
Though they would grow, adapt, and sometimes suffer, all the major policy
elements of Shell's strategy were in place by 1929. Their vertical relationships [u&d]
were also established as, [nxd & pmp=] despite its worldwide discoveries and position as
largest producer. Shell's markets, especially in the U.S. were already growing faster than
its production in the I920s.

In the years since its origin the Royal Dutch/Shell Group managed the unlikely combination
of achievements of attaining diplomatic status while selling gasoline, marine fuel, and
a full line of specialty products, openly, worldwide under a single name and trademark
(PL01)(PL02)(PL10)(PL11)(PL15)(PL20). An indigenous cog in each local economy, supplied from
the nearest source of production worldwide while fueling and serving the British Empire,
Shell became the largest [pmp & tpt] producer and shipper, a pioneer in bulk transport,
a large rfner and volume-oriented marketer, vertically integrated to local markets, acquiring
a uniquely accommodative view of individual, national, and competitive
differences from the circumstance of its two European parents having begun
business in Asia (PL03)(PL08)(PL17)(PL18). It was a commercial counterpart of the British
Empire on the way to Utopia with all competitors accommodated, none destroyed,
with price wars limited and volume steadily expanding, and with the Dutch
scientific contribution of expertise to upgrade nrg.pc to products of maximum
value—first fuels, then lubricants and specialty products, and soon chemicals
(PL12)(PL13)(PL14)(PL19). In its policies there was a sense of public service (SR01)
and responsibility to its employees (SR04), to the countries where it operated (SR03).
and even to its competitors (SR02). It was pursuing a different social model than the
hard-nosed, close-mouthed, laissez faire capitalism often practiced by Rockefeller's
minions. [Greene.STRATEGIES:223]

224=

9.5 1930-Present: Coping with Growth and Change

Until the diversification and nationalization movements of the late 1960s and 1970s
Shell's management problems have for the most part been those of coping with
growth and change rather than striking out in new directions.

The rapid expansion of the 1920s, especially in the U.S., bought at high prices in a
rising market, made Shell vulnerable to the events of the 1930s (EC30). Its U.S.
affiliates taken together suffered more than those of any other Major, losing
$37m from 1930 to 1934. What was damaging, however, was Shell's response. Cash
was hoarded and its large debt load reduced, but also its exploration staff was
dismissed and valuable undrilled leases were surrendered even though the U.S.
affiliates were nrg.pc short. Except in California and east Texas to a limited
extent Shell missed the opportunity to buy nrg.pc rzv~. After 1935 volume
and market share as measures of marketing success were replaced by
"competitiveness"—the idea (PL21) that Shell's costs in each major market should
be in line with those of the lowest cost competitor or the market abandoned. As
a result it withdrew from CO ND SD NE OK KS AR NY W.PA, its first withdrawal
since SamM's troubles at the turn of the century.

DtdH's career also came to an end in his seventieth year in 1936. Always hot tempered,
in recent years he had an increasingly erratic effect on the organization as his
autocratic tendencies (PV14) approached megalomania. Worse still, he became
pro-Nazi (PV13). The (R10b) confiscation of Shell's properties in RUS without
compensation in !917 was an affront he never forgave. He became the world's
leading vs-CMN, was burned in effigy in Russia, and until 1927-1928
persuaded other oil companies not to buy Russian oil. One rumor has it that
Shell's appearance on the USA East coast was in retaliation for Socony's
purchase of RUS kerosene in 1927-1928. Influenced by his RUS (aristocratic and
gte second wife and German third wife he came to see the
Nazis as the only solution to communism. He became an embarrassment to the
diplomatic managers of Shell and was finally eased out and went to live in
Germany where he became intimate with Nazi leaders. Hitler and Goring sent
wreaths to his funeral in 1939 just before the outbreak of war. After the war
the niche in the entrance to Shell headquarters in The Hague intended for DtdH
stood empty. So that no one may again tyrannize Shell as DtdH did. the company
adopted the present top management structure of a group of three to eight
Managing Directors whose chairman is ruthlessly retired at sixty.

Without DtdH's strong hands at the reins, and partly in reaction to him, there was
a tendency for the members of the Royal Dutch/Shell group to become less well
coordinated, to go their own separate ways. This tendency was reinforced by a
variety of factors. The age of the group's first generation of senior managers was one.
DtdH's successor, J.E.F. de Kok, died in office in 1939. The hard times of the
depression forced each subsidiary to consider its own
future (EC30). The policy of localization (PL17) and the appointment of native
chief executives rather than expatriates from Britain or the Netherlands gave
more weight to local issues. During WW2 the Royal Dutch managers and
directors, able to exercise their authority only from Dutch soil, evacuated not
to London but Curasao, a location which made coordination with London and the
subsidiaries more difficult. The war itself (EC39), centered in Europe and the
Far East, cut off communication with more of Shell's properties than with those
of any other Major,

WW2 (EC39) also cost Shell more than any other Major. It lost its Romanian
production (R06) and 87 of its 180 ships (R92a); its Far Eastern properties were
destroyed; and its markets were in disarray. It had cooperated closely with the
Allies in the war (PL18) and its U.S. refineries had made especially notable
contributions in the provision of aviation fuel (PL20), gasoline (PL10), and
fuel oil (PL11). Shell and other large-scale refiners led the way in the (R42)
production of 100 octane gasoline for aviation fuel and in catalytic cracking.
General Jimmy Doolittle had been Aviation Manager of Shell before the war and
was instrumental in the development of long range aircraft. Catalytic cracking
and the production of high octane fuel required for high performance flying led
Shell's research scientists into the synthesis of aromatic petrochemicals like
cumene (in 1942) which were first used as enriching agents to raise the octane
rating of gasolines for aviation (PL12)(PL19)(PL20).'!

But as events unfolded after the war Shell became aware of an
even greater loss: they were the only Major without pmpion from the enormous new
rzv~ in SaA and KWT (H03). They had pmpion only in IRQ in the Eastern
Hemisphere after the war (before their Dutch East Indies production was
rebuilt). They had fallen from the position of being the leader in the
development of new rzv~ and production to being seriously nrg.pc short and
at a competitive disadvantage to the new Mideast pmpers with enormous low cost
rzv~ (H03). As a partial remedy Shell was able to negotiate the largest long-term purchase
contract (R47) in the history of the industry with old friend Gulf.crp.nrg, who was
as anxious for markets as Shell was for nrg.pc, in 1947. Shell would purchase half of
Gulf.crp.nrg's KWT production up to 750tBd and split the profits with Gulf.crp.nrg.
Still this handicap was the most significant fact in the postwar period for Shell.

In the complicated sequence of events that led to this result Shell was a victim of its
own policies of cooperation (PL13) and misplaced faith in the British government (PL18).
Having bound its competitors with marketing agreements in the period from 1928 to 1932,
it let itself be bound by the Red Line [ID] exploration and
production agreement [RL.nxd.pmp] after 1928 as its competitors, one

by one, freed themselves to obtain interests in SaA and KWT. It also allowed itself to
be outmaneuvered by the British government,

*1913+: Until it could no longer do so British foreign policy was to cordon off the Mideast
for BP.crp.nrg ID, which was its majority owner. The Netherlands had
attempted much the same thing in the East Indies for Dutch companies including
Shell [Greene.STRATEGIES:226]

*1901+:Actions of ntn.stt~ & crp.nrg~ explained largely by
19th-c power struggles = control the trade routes to the Far East over which Britain and
France, and later Britain and Germany, had struggled since before Napoleon
*--Britain chose the sea route and needed a secure supply of oil to fuel her Navy,
the backbone of her Empire. Disraeli in 1875: had bought control from the Khedive of EGP
of the Suez Canal, built by the FRNw. GRM, the power of the Continent, took the land roule
and built the TRKw BGD.rrd from BGD to BRL. It wanted control of the nrg.p.ggr for i(s rrd~.
This explains the activity of the Deutsche Bank in the oil industries of Romania and O.TRK
[Greene.STRATEGIES:226]

*1914:British government bought control of BP.crp.nrg ID. Shell was eventually
replaced by BP as operator of the TRKw nrg.p cns. The purchase of BP prevented ENG frm giving equal
treatment by to Shell, its largest oil company [Greene.STRATEGIES:226]

*1928+: By relying on agreements like the Red Line [ID] and on a mistaken view of
its place in the British Empire (PL13)(PL18), Shell missed out in the really big
finds in the Mideast. This is not to downplay Shell's heavy financial commitments
in USA and VNZ in the late 1920s and financial difficulties in the 1930s as crucial
factors. But just a few years earlier DtdH and Shell were leading the industry into
such promising new areas. In the late 1920s and early 30"s they did not
[Greene.STRATEGIES:226]

*1946+:In the post-WW2 surge of demand Shell rebuilt and recovered, aided for once by a British
Treasury agreement in 1946 (EC46), freeing Shell from exchange controls and
permitting oil payments in sterling rather than scarce dollars, a slight
advantage over American companies." The Shell story from 1946 (o 1973 is one of
growth of marketing volume (PL04) and construction and expansion of large-scale
rfneries (PL05), including the world's largest at Pernis (near Rotterdam NDR).
Near its refineries Shell built large-scale bulk petrochemical plants (PL05)(PL19).
to produce the products resulting from its research (PL12) || Shell enjoyed able
leadership in the postwar years from men developed within its own ranks: George
Leigh-Jones. Frederick Godber, Sir David Barran, F..I. Stephens, and Sir Frank
McFadzean, all British, and J.B. August Kessler, B. Th. Van Hasselt, H. Bloemgarten.
F.A.C. Guepin, and L.E.J. Brouwer from the Dutch. Special mention must go to J.H. Loudon,
General Managing Director from 1952 lo 1964, who inherited his father's diplomatic
skills and healed many of the divisions which had developed in the I930s and during
the war [Greene.STRATEGIES:226/227]

The level of
coordination between geographical units of Shell was often still imperfect, as
for example when the Curacao refinery was dumping products in Rotterdam while
European affiliates were trying to maintain prices.' Shell brought in the
consulting firm of McKinsey and Company in 1957 to address these organizational
inefficiencies which were affecting profits. The role of the Managing Director
was redefined, more directors were added, and a number of new positions for
Group Coordinators for various functions were created, all no doubt with
salutary effect. The nature of this response to lack of coordination was not lo
centralize authority or diminish the policy of local autonomy (PL17) but to work
a little harder at coordination, || Shell's greatest problem, however, continued
to be its shortage (H02) of nrg.pc, stemming from lack of equity in low cost Mideast (H03)
production.7* The Gulf contract provided vertical balance after the war but
also delayed needed exploration.7' As Shell's markets grew, the gap between
production and sales widened. Shell explored worldwide, participating nearly everywhere
there was exploration.8" It was often the first to enter new areas,
especially those with complicated geological structures. In this its strategy
was the opposite of that of BP, which sought large, simple structures. Shell was
a leader in secondary and tertiary recovery to get more oil from existing fields
and in deep water drilling technology.1" There were two reasons for
these tactics. First, being nrg.pc short it had to take more chances than companies
with huge Mideastern rzv~ (H03). And second, its efforts reflected its interest in
technical expertise (PL12). [Shell u&d#1=] It made its share of discoveries,
including positions in Colombia (1945), Canada (1953), Algeria (1956), NGR (1958— with BP).
Abu Dhabi (1963), Oman (1964), and the North Sea (1971, 1972). It developed a strong U.S.
offshore position in the Gulf of Mexico and made a major discovery of gas with Exxon
[ID] in 1960 in the Netherlands.82
But on the whole the fields it found were smaller and less profitable than the
largest discoveries of the postwar period.91 many made by BP, and
Shell did not regain the position of leadership in production it once enjoyed,
|| Like other oil companies Shell became interested in diversification in the early 1970s and
made two significant commitments. It joined Gulf in the disastrous HTGR nuclear
venture (R70a), perhaps seeing in the nuclear industry a natural application for
its technical expertise and political acceptability (PL12)(PL17). It also acquired
in 1970 an old Dutch mining and metals producer, Billiton N.V. (R70b). with tin
interests in Thailand, aluminum in Surinam, and coal in Australia.MTwo factors in this decision were to use Shell's shipping (PL03) and trading
expertise (PL04) in dry cargo businesses like ores and coal.*1 After
the wtpt market became glutted Shell hauled grain to Russia in the early I970s
as it once had turned its wtpt~ into cattle boats when Spindletop went dry in
1902 [Greene.STRATEGIES:227]

a{}b{}c{}d{}e{}|>Std.crp.nrg|>Std|
<>Standard Oil Company| n{}o{Because strategy has its roots so
deeply anchored in the past it is quite difficult to explain the strategies of any of the Majors
without reference to Standard Oil, the granddaddy of them all. [Std.chd=]Exxon [ID]
Mobil [ID]
Socal
Plus 31 others. Their strategies are dictated by their inheritance from the United States v. Standard Oil,
the 1911 vs-fdu case which resulted in the dissolution of Std.crp.nrg into thirty-four companies, nine of
which had foreign operations [Greene.STRATEGIES:37]
}f{
The Legacy of Std.crp.nrg
3.1 Effect of Standard on the Majors
3.2 Standard's First Decade: 1871-1881 [Greene.STRATEGIES:37/38]

*1877:1881; [Std.crp.nrg] began gobbling up rivals. The record indicates that
Standard followed a policy of purchasing rather than fighting rivals, paying
good but not exorbitant prices (PL08). By gaining the goodwill (PL09), as well as the
properties, of sellers, future acquisition was made easier. Similarly, by refusing to pay
exorbitant prices, future acquisitions were made cheaper and entry for the purpose of
selling out at a high price to Standard was discouraged. Standard often took great
pains to cultivate the goodwill of competitors (PL09).11 As with other
policies, Standard's acquisition policies took a long run view of the business (PL07)
[Greene.STRATEGIES:38]

*1881:Standard was dominant in gathering and refining, but it had only limited
influence in marketing, and very little in production, aside from its position
as a buyer. Trunk ptpt~ were just coming into existence. But
through acquisition and expansion by 1881 Standard's net book value had grown to
$55 million. [Greene.STRATEGIES:38]

In its first decade a number of important domestic policies had emerged
[fnc pmp rzv rfn & tpt]. To Rockefeller and his associates, the petroleum industry
was a different kind of business than it was to the pmpers. Standard had achieved control
(Exhibit S-l) through its positions in purchasing, gathering, storage, and
[Greene.STRATEGIES:38/39]
refining, and it had a strong position in transportation (PL05)(PV06),14 These
were the capital intensive areas of the industry which required large fixed
investments and high levels of steady operation to operate efficiently (EC04,
PL04,10). There were scale economies to be realized from large size in
purchasing, storage, and the logistics of supply as well as in refining. Large
fixed investments required a long run view of the business. Rockefeller and his
associates were the first to believe in the permanence of the industry. The rise
of Rockefeller and Std.crp.nrg, with its strength in supply and refining, and
emphasis on steady operation, scale economies, and the long run stands in direct
contrast to the vigorous, wasteful, competitive chaos of the producing industry,
a group whose organization could have provided a model for the Oklahoma land
rush.

One policy consequence was that Standard stayed out of
production (PL11). In [1878ap:Std.crp.nrg dtr~] voted not to buy any more
producing properties and the same year they decided to dispose of the few
existing properties which had come with various acquisitions.15 The
instability, rapid exhaustion of properties, inability to gain control, and
uncertainty of discovery [u&d#1] were unappealing (PL11).

[fnc over production=] Another policy consequence was that capital intensity, scale
economies, a long run view of the business, a variety of businesses, and many
partners required a financial view rather than an operating view of the business
(PL12). Standard's financial policies were the key to its success. Since there
was no price competition within the combination, the aggressive entrepreneurs
who joined Rockefeller competed to reduce costs, improve quality, standardize
products and processes, develop new refining methods, and raise profits.
Duplicate, inefficient, or poorly located facilities were eliminated. In January
1877, the company began self-insurance against fire up to $100,000. Risks were
spread over all the activities of the combination and funds flowed from one
place or company or function to where they were needed. The most important
financial policy was internal financing of all ventures and maintaining
liquidity at all times (PL13). As Rockefeller expressed it, "I think a concern
so large as we are should have its own money and be independent of the
'Street'."16 No later than 1882 Standard had no long-term debt and no
later than 1886 lent far more short-term money than it borrowed." Dividends
were modest to permit the accumulation of capital. These policies gave
Standard financial strengths that were unmatched by any competitor. And Standard
used them. [Greene.STRATEGIES:39]

Aside from its financial policies and view of the business, the most notable difference
between Standard and its competitors or even other large firms of the day in
other industries was its system of management. In its first decade Standard was
an alliance of shareholders, most of whom were aggressively individualistic
entrepreneurs who had founded their own companies and still ran them within the
Standard fold (PL14). For this reason and the
[Greene.STRATEGIES:39/40]
geographical and functional spread of operations, managerial authority was necessarily
decentralized from the beginning. Standard was not a single organization with
geographical and functional subsidiaries. It was a confederation of formerly
autonomous and competitive units.

Long-term investments required planning; planning required information (PL15). As the
organization grew, the information required to make intelligent decisions grew apace.
To gather, process, and analyze this information on costs, supplies, market conditions,
and competitors, staffs were assembled in New York, Cleveland, and elsewhere (PL16).18
Standard operatives and agents gathered information on every phase of operations and every
move by competitors, a practice whose extremes caused as much criticism as spying.
[Greene.STRATEGIES:40]

With large-scale, long-term investments, planning
requirements, the need for experimentation and information, with so many
elements interacting, and with so many strong individuals running their own
operations, the task of central coordination was necessarily diplomatic and
deliberative (PL17). Consultation and study on decisions took time. Standard
reached decisions cautiously and carefully, but once they were reached, it used
its financial strength and efficient organization to carry them out vigorously
on a scale others could not match (PL18)(PL19). In the 1870s critics opined that
since Standard had invested so much in rfneries in the oil region of Pennsylvania,
it could not afford to take advantage of the development of trunk ptpt~ and establish
large rfneries on the coast. The feasibility of trunk ptpt~ was established in 1879 by
others. In 1881 Standard formed National Transit Company and by the next year it had
built over 1000 miles of trunkline. Standard was often not the leader in
innovation, but it was a vigorous follower (PL19). Once an innovation was
proved, Standard was flexible enough to take decisions on as large a scale as it
operated (PL20). [Greene.STRATEGIES:40]

It is worth a moment to evaluate the 42-year-old John D. Rockefeller
in 1881 at the end of Standard's first decade. He is
thought to be the greatest of the robber barons of the nineteenth century. Yet
this reputation does not capture his genius. Had he been simply a ruthless
competitor, which he may have been, Std.crp.nrg would never have been formed.
Rockefeller's genius was not just in his decisively different view of the
petroleum industry. It lay in his ability to attract to his organization a
number of able and aggressive entrepreneurs— founders, owners, men accustomed to
running their own businesses as they pleased, the most independent spirits of
the most individualistic period of U.S. business history—to lead them,
harmoniously, to a common view of the business, and to organize a system of
management that accommodated their differences and effectively used their
abilities. Rockefeller did not kill off his rivals. He converted them. One need
not condone his nineteenth-century ethics and actions to pay tribute to the
genius of his leadership, not only in bringing the pieces of Std.crp.nrg
together, but also in laying a foundation of policy
[Greene.STRATEGIES:40/41]
and a system of management whose excellence in developing managers and producing results has
stood the test of time. It would be nearly 50 years before Alfred P. Sloan
performed a similar task at General Motors. In the world of
business, no one had done such a thing before. Except for Sloan in the 1920s and
possibly Thomas Watson of IBM in the 1960s, no one has been able to duplicate
his accomplishment since.

3.3 Standard's Second Decade:
1882-1891

In its first decade Std.crp.nrg and many of its policies were formed. In its second decade,
it matured. There were fewer acquisitions. Operations were systematically
studied. Waste and duplication were eliminated. Costs were reduced. In the area
of management, it was a decade of consolidation (PL10). [fdu=]

From 1882 until 1892 Standard was organized as a trust (PL21). This change in formal
organization occurred in response to a suit won by the state of Pennsylvania
upholding its right to tax all of the capital stock and dividends of a
corporation operating within the state, not merely those derived from business
within Pennsylvania. It was imperative that Standard create separate
corporations to hold its properties in each state, and a central legal entity to
hold them. These legal difficulties arose in part because corporations were state chartered
(there are no nationally chartered corporations in the U.S.) and partly because of
the novelty of a corporation which did business and owned assets in more than one state (PL22).
[Greene.STRATEGIES:41]

Standard also recognized the need for other administrative changes, including moving its
headquarters from Cleveland to New York, its financial and business center, and
obtaining more complete control with the reduction of minority interests and
administrative simplification. Minority interests could be reduced by inducing
minority shareholders to accept shares in a parent organization. The fdu form of
organization was selected because it fulfilled these prerequisites and for
another reason which was very important to Standard's management, the
maintenance of a veil of secrecy over the operations of the combination (PL22).22
The fdu form accomplished the creation of a central office with geographical divisions,
the second step on the ladder of organizational advances from proprietorship to
multidivisional enterprise, which improved product and information flows and efficiency (PL21).
[Greene.STRATEGIES:41]

The Standard Oil Trust [Std.crp.nrg.fdu] held shares in the operating companies and 41
investors held shares in the fdu.23The legal innovation used by Standard was
that the nine trustees were authorized to exercise managerial authority over the
operating companies. When one of the nine original trustees chose not to
move to New York, the trustees took advantage of a provision of their bylaws to
permit the other eight to manage as the Executive Committee.24 The
number
[Greene.STRATEGIES:41/42]
required for a quorum was gradually reduced as others were temporarily absent. In practice,
as before, the Executive Committee constituted the day to lay management.
The concept of management by owners had evolved to the policy of
management by an active inside board who met daily to determine what policies
and decisions were in "the general interest" (PL23).25

By controlling all appropriations over $5,000, beginning in 1882, the committee
controlled the rate of growth of each segment. In 1886 annual reports were
required for all salaries over $600 per year and the committee passed on all
recommendations for raises.26 Although lines of authority at the top
were somewhat vague (due to the legal ambiguities of the fdu form and the novelty of
its use by Standard), with these two tools, control over appropriations and salaries
(PL24), the Executive Committee controlled the organization.
[Greene.STRATEGIES:42]

To focus attention and bring expertise on particular functional issues which affected
parts of several of the statewide operating corporations, each with its own
limited group of functions, and to relieve the Executive Committee of some of
its burden, a series of coordinating committees with advisory powers
emerged (PL25). By 1887 the major committees were Manufacturing,
Transportation, Case and Can, Export Trade, Lubricating
Oil, Cooperage, and Domestic Trade.27 The committees were forums
to assess information, gather views, and achieve unanimity. Cooperation was
obtained through consultation, discussion, and compromise. Decisions of the
committees took the form of requests, suggestions, and recommendations rather
than orders to the operating managers of the companies.28 Due to the
somewhat undefined legal status of the committees, there may have been legal
reasons as well as policy reasons for this deliberative, considerate style of
management (PL17). But, in the main, the committee system served admirably to
achieve consensus and support for "the general interest" while permitting the
delegation of authority to operating managers to manage their businesses,
subject to general policy guidance. [Greene.STRATEGIES:42]

The necessary concomitant to a deliberative, decentralized form of management is
the ability to act decisively when a decision has been reached (PL14)(PL17)(PL18)(PL20).
There were three environmental changes in the 1880s which required such action.

The first was the introduction of trunk ptpt~ at the
end of the 1870s. Since Standard was already dominant in the gathering and
storage of oil, in purchasing, and in refining, it is only natural that when
nrg.pc began to move by pipe rather than rail Standard would move into trunk
ptpt~ to strengthen its hold over oil transportation (PL26). It was familiar
with ptpt technology from its gathering activities. Negotiating with the
railroads had sometimes been difficult and had occasioned criticism. The
opportunity to forge a stronger link in the chain was not to be missed. By 1885
the National Transit Company, Standard's trunk ptpt subsidiary, had four lines
in operation
[Greene.STRATEGIES:42/43]
which blanketed the industry: one from Pittsburgh to Cleveland which passed through
the oil regions; a spur from the oil regions to the Buffalo terminal; a line
from the regions to New York; and another to Philadelphia and Baltimore.29
The strategic entry into ptpt~ was to remain a Standard strength and
characteristic, through its successors, worldwide, permanently.

Whenever possible the ptpt~ were located on the railroad's right of way, to minimize both
lease prices and the cost of hauling building and maintenance materials.
To cushion the effect on railroads of loss of oil freight to ptpt~ Standard even
gave a rebate of 26% of the transportation revenue to the seaboard to the
Pennsylvania Railroad, whether the nrg.pc went by rail or not (PL09).31
Standard's policy, as with other acquisitions was to pay good prices (PL08), a
policy rivals sometimes deemed anticompetitive. Another important ptpt policy,
also characteristic of its other operations, was that Standard built for
permanence (PL07) where some of its rivals built cheaply and hastily. Like
National Transit, the Tidewater Pipeline Company had to bury its pipe, when
temperature changes caused exposed pipe to whipsaw.

The completed gathering, storing, and transportation system deserves comment because
it demonstrates the systematic rationality of Standard's management and the
relation of Standard to the largely independent pmpers.33 When a
pmper requested a run from the tank at his well to the gathering system,
Standard's United Pipeline, a company representative called a "gauger" would
strap a measuring device to this tank. The data from the run would be wired to
district headquarters where it was credited to the balance of the leaseholder.
Royalties to the landowner were deducted and credited to the landowner. Three
percent of the volume was deducted as an allowance for evaporation, leakage, and
B.S.& W. (bottom settlings and water). An oil certificate was issued for each
1000 barrel lot and fractions were carried on the books as a credit balance. The
charge for pipage after 1879 was a flat 20c per barrel, regardless of distance
piped. Storage was free for 30 days. After that the storage charge was 1.25
cents per barrel per month. Monthly and annual reports of stocks on hand were
publicly issued according to Pennsylvania law. Fire losses were assessed to all
owners of credit balances according to the size of their balance. For its
accuracy and efficiency in extending gathering systems to new fields, Standard
earned praise even from its critics.34 It applied the same
thoroughness and dedication to this field (PL12) as it did to preventing price
competition and driving out or absorbing competitors. [Greene.STRATEGIES:43]

Oil certificates were traded on exchanges in the oil regions
and in New York. Standard purchased almost all of the nrg.pc for its
rfneries on the exchanges. In 1885 its rfneries consumed 16.1 million
barrels when production was 21.5 million barrels and stocks in storage were 35.7
million barrels.35 It was the largest but far from the only
purchaser. Its practice was to pay the average between the high and low price
for superior quality nrg.pc~. On at least one occasion it paid a premium price to
encourage drilling and
[Greene.STRATEGIES:43/44]
development of production in an area where it had a rfnery. It sometimes paid higher
prices in local areas to bid oil away from competitors, raising the cost of
their raw material.

It may come as a surprise that in so many instances Standard's
policy was based on paying high rather than low prices (PL08). Rockefeller
argued that Standard should buy certificates in excess of consumption of nrg.pc
when prices were low. Surplus funds earning a low rate of interest should be put
to work at his potentially profitable use. They might help to stabilize falling
prices. Falling price of nrg.pc was not felt to be in Standard's best interest.
It discouraged exploration [nxd], antagonized pmpers, and endangered future
supplies. Large purchasers of rfned products, Standard's principal customers,
postponed purchases in hope of a lower price, adding to inventory problems. As a
large owner of nrg.pc in tanks, Standard also had to be concerned about
maintaining the value of its inventories." Hidy and Hidy concluded that Standard
did not speculate on the exchanges, aside from purchasing excess nrg.pc when
prices were low. [Greene.STRATEGIES:44]

The concern over long-term supplies of nrg.pc (PL07) eventually propelled Standard
to takethe second major step of the decade: investment in Lima (Ohio) nrg.pc
(PL27). Pipeline men with Standard had long wanted to get into [pmp] production.
Pipeline loads would be stabilized; competition from other transporters would be
less important; public criticism from pmpers would be minimized; and the
opportunities for profit appeared large. Rfners, on the other hand, viewed
Standard's business as the manufacture of rfned products (PL01).39
nrg.pc was simply raw material in which investment should be minimized. nrg.pc
production was a chaotic, unstable business, a speculation better left to others
(EC05). [Greene.STRATEGIES:44]

Two factors brought about a change in Standard's strategy of production. Consumption
of Pennsylvania oil had begun to exceed its production in 1885 and the prospects for
new rzv~ as large as the Bradford field appeared unlikely. But it was the challenge
of Lima nrg.pc to the stability Standard had labored so hard to achieve which proved
decisive. To retain that stability Standard decided that it had to conquer Lima nrg.pc.
[Greene.STRATEGIES:44]

The discovery of Lima nrg.pc in 1884 [u&d#1] challenged both
groups within Standard. It was vile smelling, sulphurous stuff, nicknamed (with
reason) "skunk oil." It had a smaller percentage of lighter fractions, similar
to the petroleum pmped in Ontario, across Lake Erie. It defied refining by
existing methods, producing a smaller fraction of inferior kerosene at a cost at
least 10 cents per barrel higher than Pennsylvania nrg.pc. It was
located in northwestern Ohio (near Lima) and northeastern Indiana, an area
geographically distinct from the Appalachian region, which would require a new
system of gathering and trunk ptpt~. Standard executives perceived immediately
the importance of Lima nrg.pc to Standard's strategy. They could not afford to
allow anyone else to handle it; neither could they afford to pay more than it was
[Greene.STRATEGIES:44/45]
worth in the form of manufactured products. As Benjamin Brewster, one member of the Executive
Committee wrote, "The question is—how to utilize it and where....We can afford
to spend time and money on [the problem] to answer [it] intelligently."42
It was a response typical of Standard's approach to problems (PL12)(PL15)(PL18),

Their first move was to control the nrg.pc. The Buckeye Pipeline Company, organized March 31,
1886, was authorized to construct a gathering and storing system. In June 1886,
Standard's purchasing agency began to buy all the oil Buckeye took in, about 85%
of Lima Indiana production. Standard then hired Herman Frasch, the outstanding
researcher on sulphurous oil, from the Imperial Oil Company, Limited, in Ontario
to solve the problem of refining [nrg.pc] "sour" crude. On July 1. 1886 the
Solar Refining Company was formed with a plant at Lima to process "sour" nrg.pc.
Frasch took longer than expected, until October 1888, to conquer Lima nrg.pc. In
May 1889 Standard then began construction on a huge new rfnery at Whiting's
Crossing near Chicago (PL04). With a 36.000 barrel per day capacity, the largest
in the world, it was designed to supply the entire Mississippi valley. The
Whiting rfnery was a monument to the victory over Lima nrg.pc and to the policy
of having ample funds available when needed (PL13).

The victory was completed when in June 1889 Standard made its first major investment in
producing property with the purchase of the Ohio Oil Company (PL27). In 1888
Standard's total production was only 200 B/D out of 75,649 B/D in the U.S. By
1891 it was 38,994 B/D out of 148,747 B/D, over 25% of the U.S. total (Exhibit
S-l).45

By the end of 1891 Standard had invested in Lima nrg.pc $9.6 million in ptpt~, $7.2 million
in inventories, $7.3 million in rfneries, and $8.1 million in producing properties, a total
of $32.2 million.46 It had also put $14.5 million into other producing properties.47
The cost of these massive strategic investments, a total of $46.7 million, compares to net assets of $55
million in 1881 and $102 million at the end of 1892 (PL20).
[Greene.STRATEGIES:45]

The third major event which profoundly affected Standard's strategy was the threat to its foreign
marketing by Russian oil (EC06) [R&A]. It led to the bulk distribution of products
at home and abroad and the establishment of foreign marketing affiliates
(PL28)(PL29). The foreign market was very important. In the early 1880s more
than half of U.S. rfned products were exported. Two-thirds went to Europe.
Kerosene accounted for more than 80% by value of rfned product exports. Standard
handled 90% of the exports." Standard had a virtual monopoly in foreign
kerosene, which was shipped abroad in barrels painted blue with white ends
bearing Standard's brand names and in cans to the hotter climates. But most
sales were through commission agents f.o.b. New York so that Standard's control
ended at the edge of New York harbor. [Greene.STRATEGIES:45]

By 1888 Russian kerosene had seized 22% of the world export market.51 With high
quality kerosene, highly productive wells, production costs one-
[Greene.STRATEGIES:45/46]
third to one-half those in the U.S., continuous distillation, proximity to markets in
Europe and the Eastern Hemisphere, cheaper bulk transport in tank steamers, an
internal market for fuel oil which made kerosene a byproduct that could be sold
for whatever it would bring, regulations promoting export, and financed by
Europeans like the Nobels and Rothschilds, Russian products were formidable
competitors to Standard's. Standard met the Russian competition head on. To hold
on to market share it cut prices, to the dismay of rfners. It upgraded its
services. It did not market inferior kerosene made from Lima nrg.pc abroad. These
efforts were to little avail. By 1888 when its volume in the U.K. showed an
absolute decline, a more effective response was needed.52

It came with the overhaul in the next three years of Standard's entire system of
foreign distribution. Bulk marine transport led to the establishment of foreign marketing
affiliates to distribute oil under the Standard brand names in new, efficient horse-drawn
tank wagons (PL28)(PL29).

Wilhelm A. Riedeman, a leading German importer of Standard products, [wtpt=] ordered a
new vessel, the Giiickauf, which was launched June 16, 1886 (EC07). It carried
20,000 barrels of oil contained in its skin rather than in tanks or barrels. The
cost was about three-fourths as much as by sailing ships carrying 5000 barrels
each. By 1892 three-fourths of the total export of American nrg.pc and kerosene,
except that in cases, was in bulk. [Greene.STRATEGIES:46]

Transport in bulk required a brand name marketing affiliate at the other end to package and
distribute the product. The Anglo-American Oil Company, Limited, [>AAm.crp.nrg] Standard's
first foreign affiliate, was organized on April 24, 1888 to import and wholesale in the
British Isles. The following year it delivered to jobbers and retailers 71% of all American oil
imports to Britain. It had also begun selling under its own name to commission merchants
throughout the British Empire in the Eastern Hemisphere.
[Greene.STRATEGIES:46]

On the Continent the need to compete quickly, the lack of knowledge of the wholesale
trade in each country, language barriers, and myriad legal regulations such as
restrictions on warehousing and storage permits required alliance with established local
merchants, the largest and best managed possible. DAPG, theDeutsche-Amerikanische Petroleum
Gesellschaft (German American Petroleum Company), approximately 40% owned by
Standard, appeared on February 22, 1890 to market in Germany; the American
Petroleum Company (51% owned) (Holland and Belgium) on March 10, 1891; two
companies (60% owned) in Italy in 1891; and a 21.45% interest was purchased in a
Scandinavian firm late in 1891. [Greene.STRATEGIES:46]

By the end of that year the policies of bulk marine transport and wholesale distribution
through partly owned foreign affiliates were well established (PL28)(PL29)(PL33). But,
though it had several opportunities. [pmp rfn=] Standard declined to enter either
foreign production or refining at this time outside the Western Hemisphere. It is also
interesting to note that specialty products such as
[Greene.STRATEGIES:46/47]
lubricants, wax. and vaseline maintained their own separate foreign marketing organizations
and had established offices abroad in the early I880s. The older
pattern of specialized marketing, a necessity for developing the market for new
products (PL30), preceded bulk marketing of kerosene and the establishment of
foreign affiliates. It remained at the time of divestiture in 1911, when nine of
the thirty-four pieces into which Standard was split had foreign operations,
mostly in marketing.

Bulk distribution produced similar changes in domestic marketing between 1889, when
Standard had only 252 tank wagons east of the Mississippi, and 1892 when
one-third of its kerosene deliveries to retailers were by tank wagon.60
Control of marketing tightened, as minority interests were bought out; control
over brands increased; efficiencies of centralization were sought. Prices were
set by the general policy of maximizing market share (PL31), a refining oriented
policy that would maintain volume and the efficiencies of scale. As Rockefeller put it
in 1888, "We want to continue, in reason, that policy which will give us the largest
percentage of the business."61 Prices were cut where local or foreign competition
required and raised to the limit where it did not.
[Greene.STRATEGIES:47]

These incidents show Std.crp.nrg at the peak of its power—a Goliath-moving
rationally, deliberately, systematically, using its massive financial resources
in the attempt to impose its will on the industry (Exhibits S-l, S-2). They show
two other things. Even in the 1880s the industry was already growing and
changing too rapidly to be dominated by any single competitor. Also, Standard
was never immune to competition. In each of these three incidents Standard's
strategy was a response to competition, in spite of all it could do to eliminate
it.

Its dominance of the industry, however, was awesome (PL31).
Even as late as 1899 it pmped one-third of U.S. production and rfned an
astounding 80% of it. If anything, in gathering, storage, and transportation of
nrg.pc it was even more dominant. In the export market it marketed the products
of other rfners as well as its own, bringing its share of U.S. exports to 90% or
more on at least some occasions.

However, because of the nature of channels of
distribution this may overstate Standard's position in marketing somewhat. Until
1890, when foreign affiliates were established, marketing consisted of little
more than wholesaling at the rfnery gate or New York harbor in branded
barrels. All exports were governed by the rules of the New York Produce
Exchange, like other commodities then or later.64 Commission agents
who handled general merchandise were the main channel of distribution. After the
1880s Standard faced substantial competition everywhere abroad from Russian
products. Its share of the foreign market was perhaps only a third of petroleum
product sales. It had significant competition from other products and
technologies at home and abroad. Not only fats, oil, wood, and coal competed
with petroleum
[Greene.STRATEGIES:47/48]
products, but also natural and manufactured gas, rfned products from shale and, most
importantly, electricity.65 Even after the establishment of foreign
affiliates, Standard was still integrated forward into marketing only to the
bulk distribution wholesaling level both in the U.S. and abroad (PL28).
Retailing was still done through the general store. Specialized retailing
outlets for petroleum products did not appear until the invention of the gas
station about the time of dissolution in 1911.

In production its influence was far more dominant than its market share indicates.
As MlnWL, the founder of Gulf and a man who had considerable experience with
Standard, recalled:

The Std.crp.nrg Company at that time was the only oil company of major importance in
existence, but it was not primarily a producing company. In fact, except in
California, it had relatively little production of its own and had never made it
a general policy to own or control production in a large way because it was
practically the sole buyer of nrg.pc oil (PL11).

Consequently, every wildcatter, every lease buyer, every owner of a producing
well, was, in effect, a part of the Std.crp.nrg Company's producing department.
Whatever price was posted by the Std.crp.nrg Company at the wellhead was the
price the producer got for his nrg.pc. Standard made the price.

In saying this I do not mean to imply that the company took unfair advantage of the
pmpers whose oil it bought. As a matter of fact, the pmpers who traded
with the Std.crp.nrg Company did very well, though some of them grumbled.
Nevertheless, these pmpers were at the mercy of this company, which had a
complete ptpt system. Normally, this was extended to any new field brought into
production. Texas had been a significant exception. So it was to be expected
that, as other fields were discovered [u&d#1] and developed. Standard's ptpt~ would be
extended to these new fields."'6

MlnWL's response to Standard's strategy is also worth noting:

This prospect did not leave much excuse for anybody to think that he could operate an
oil business on a big scale in competition with Standard if he tried to operate
in the same way as Standard. I concluded that the way to compete was to develop
an [u&d] integrated business which would first of all [pmp] produce oil. Production, I saw,
had to be the foundation of such a business. That was clearly the only way for a
company which proposed to operate without saying "by your leave" to anybody.

Standard's strategy [l&r and u&d] embraced
both horizontal and vertical integration as cornerstone
policies from its beginning. It sought and achieved, directly or indirectly,
control of each segment of the U.S. industry: production, gathering, storage,
transportation, refining, and wholesale marketing. [vs-fdu.lwx=] No organization
ever fell more clearly into Section 2 of the Sherman Antitrust Act than did
Standard (PL31).

There were fewer strategic changes in the final period of Standard's history. Much of the
time Standard was on the defensive legally. Five changes bear mention: the retirement
of Rockefeller, the difficulties in Texas, foreign refining and producing, and
the rise of Std.crp.nrg.NJ. Finally, there was the dissolution.

The retirement of John D. Rockefeller from day to day affairs, gradually after 1891
and completely after 1896, was a non-event.69 Though Rockefeller
remained nominally president until 1911, the reins of power passed smoothly from
the founder to his successor, John D. Archbold, a brilliant, capable,
conservative man, testifying to the success of Standard's system of management
in developing and retaining extremely able men (PL14)(PL32).

The next was Standard's difficulties in Texas which led to a minimal position
there, allowing the rise of Gulf, Texaco, and other companies. The Waters-Pierce
Oil Company was majority owned by Standard but managed by one of its founders, a
sharp operator named Henry Clay Pierce (PL14)(PL33).70 Pierce had been a
thorn in the side of Standard's management since it purchased half of his
company in 1878. Pierce's aggressive tactics, excessive profits, and
independence were always a source of worry to the [Std.crp's] Domestic Trade Committee. In
1900, as the result of a state vs-fdu suit, the company was expelled from Texas.
Partly from the hostility toward Standard in Texas and partly from the
impossibility of controlling Pierce, when the MlnWL family, founders of Gulf,
offered to sell its producing properties in Texas to Standard in 1902, they
received the reply, in an exception to his retirement, that "Mr. Rockefeller
would never put another dime into Texas."

The entries into foreign producing and
refining were undertaken gradually as competition required and opportunities
permitted (PL34). The extent of this activity was rather small until after WW1. Standard had financed a rfnery in Galicia (Poland) in the 1870s for a
time. In the 1880s Waters-Pierce had established two small rfneries in Mexico.
Standard also owned part of a rfnery in Havana, built to avoid tariffs on
product imports. The Imperial Oil Company, an integrated Canadian company, was
acquired in 1898.72 DAPG and American Petroleum invested in a
rfnery in Germany and later in naphtha re-run plants. In 1904 an integrated
operation, Romano-Americana, was established in Romania.73

The organizational changes after 1892 are more useful
as a historical determinant of the industry after 1911 than as evidence of
strategic change. They show why Std.crp.nrg.NJ (now Exxon) rather
than New York Standard (now Mobil) became the principal heir to Std.crp.nrg
after 1911.

Until 1899 New York Standard was the dominant financial
unit of the combination.74 It had been the headquarters of the
combination since the move
[Greene.STRATEGIES:49/50]
from Cleveland in 1881. It was the banking and financial center as well as the chief
exporter.75 Internally it made loans and investments in subsidiaries.
Externally, it settled foreign trade accounts and invested the combinations'
short-term funds.

As the result of a suit won against Ohio Standard in 1892, the fdu was dissolved.76
Its 92 operating units were consolidated into 20 companies. Taking advantage of
a change in 1889 of the state law in New Jersey, which now permitted ownership
in the stock of other corporations, Std.crp.nrg.NJ ended up with 21 of the 92
units and became a major part of Standard.77 Shares in the 20
companies were then distributed to fdu certificate holders in proportion to the
ownership in the fdu. About half of the holders refused the exchange. The fdu
then exchanged all its remaining investments from the unconverted certificates
for shares of Std.crp.nrg.NJ. This left each of the 19 companies owned about
half by the ten families of major shareholders and half by Std.crp.nrg.NJ,
whose shares in turn were owned half by the fdu and half by the families of
major shareholders. Since the fdu was prohibited from voting its ownership by
the suit dissolving it, the Std.crp.nrg Interests, as they were called from
1892-1899, were held together by the major shareholders who were steadily
growing older.7S This confusing arrangement, which would eventually
have dissolved the combination as relatives and heirs sold off their holdings,
was changed in 1899 when Std.crp.nrg.NJ was recapitalized as a holding company
with $196 million79 in net assets and issued new shares for those
outstanding in the other 19 companies, both those from the major shareholders
and the remaining holders of fdu certificates who now accepted the exchange.
Thus Std.crp.nrg.NJ became the parent corporation and the combination was
preserved.

In the 1890s Standard was a mature organization and had already begun to reap the
consequences of its policies. As an economic organization, it was splendid. Its
public image, however, was a disaster. Two decades of secrecy, sharp practices,
and size finally brought the giant down.

The American attitude toward Std.crp.nrg was curiously ambivalent, gladly embracing its products,
quality, and service and its contributions to their lives, while detesting with
equal enthusiasm its abuses. They desired the golden eggs, while wishing to be
rid of the golden goose. It is an attitude which executives today must ponder.

Partly it was an
expression of American character. Whatever the organization [Std.crp.nrg.fdu] called
the Standard Oil Trust or "interests" or combination was, no one, even its
executives, was quite sure, but it clearly was not an entrepreneurial
organization. It was large and powerful, and often seemed sinister. Americans
had won their freedom from political kings and they were not about to subjugate
themselves to economic kings in the form of what a generation hence would be
called modern corporate capitalism. Large business organizations were going
through the throes of being invented, as witnessed by
[Greene.STRATEGIES:50/51]
Standard's numerous reorganizations, and many Americans wanted no part of them. Any unit of power
larger than the individual was bound to stir resentment. And Standard did—like
no other. The increasingly sovereign American consumer wanted the products of
material prosperity set before him in glittering array by numerous, anonymous,
silent servants of capitalism. He identified with the products, but never with
the pmper.

The end came in 1911 when the holding company was struck down and dismembered into 34
companies. At the time of the dissolution the net value of Standard's assets was
$660 million. The largest piece by far was Standard Oil (New Jersey)
[>Std.crp.nrg.NJ] with
$285.5 million in net assets, followed by Standard Oil (New York)
[>Std.crp.nrg.NY] with
$60 million, National Transit [>NatTran.crp.nrg] with
$52 million, the Ohio Oil Company
[>OH.crp.nrg] with
$44 million, and Standard Oil (California)
[>Std.crp.nrg.CA] with
$39.2 million.80 [...]

3.5 The Strategy of Standard Oil

It is appropriate to close this chapter with a summary of
what is meant by a "Standard Oil Strategy" (Exhibit S-5).

Standard's strengths lay in refining, gathering, storage, ptpt~, rail transportation, and
finance (PL01)(PL05). It was deeply committed to kerosene manufacture for export as
well as domestic trade (PL02)(PL03). It sought worldwide stabilization of the
industry under its control, but never quite achieved it (PL06). Its weak areas
were new field exploration, production, and fuel oil (PL11). Most of its nrg.pc
was purchased (even after 1888) at daily average prices on the oil exchanges
(PL08). After 1888 it purchased and developed producing properties but did
little wildcatting in non-producing areas (PL27). Until the late 1880s it sold
its rfned products for export through commission agents in New York. After
that it sold wholesale through foreign affiliates in Europe and Canada. It
practiced limit pricing but not monopoly pricing. Its policy was to maximize
market share and cut price when it had to (PL06)(PL12)(PL31). It believed in secrecy,
narrow legal interpretations, and used its power freely (PL22).

Std.crp.nrg was a financially oriented organization with
a large-scale, long-term perspective (PL07)(PL12). Std.crp.nrg.NY and later
Std.crp.nrg.NJ functioned like banks, investing loans and equity in
subsidiaries, receiving much of their income from interest and dividends rather
than from operations (PL13). Standard sought to increase profits by reducing
costs and expanding volume (PL12). Its policy was to buy out trouble rather than
fight, paying good but not exorbitant prices (PL08). It bought into new areas
rather than innovating or starting from scratch (PL18). It was often criticized
for paying high rather than low prices for assets (PL08). While often not the
first to innovate, it was a vigorous follower (PL19), whose expertise was
implementing proven ideas on a large scale (PL04)(PL19).
[Greene.STRATEGIES:51/52]

Standard was managed by
an active board of inside directors (no outside directors) through a system of
specialized committees (PL23)(PL25). Its management style was deliberative
and consultative (PL17)(PL18). Unanimity was sought and usually achieved.
Standard kept track of everything that occurred in the industry
through a network of its employees, agents, and staff so that decisions might be
intelligently made (PL16)(PL18). It was slow to make decisions, but
once made, it moved massively to implement them
(PL19)(PL20). It acquired and developed able
management and decentralized authority to manage operations subject to
guidelines in "the general interest" (PL14)(PL32).

Once their enterprise had been incorporated as the Std.crp.nrg Company, Rockefeller,
Flagler and Harkness began a concerted effort to dominate oil refining in
Cleveland. Their strategy was to obtain still more favorable rates from the
railroads and to do so by taking advantage of the large output of their two
rfneries. Sometime in 1870 Flagler offered James H. Devereux, the General
Manager of the Lake Shore Railroad (a subsidiary of the New York Central) to
ship 60 carloads of oil a day every day if the Lake Shore and the Central would
give his company a rate of $1.30 [??] a barrel from Cleveland to New York
(the published rate was $2.00 a barrel) and 35 cents a barrel for nrg.pc from the
Regions to Cleveland.81 Devereux quickly accepted. As he later
testified the assured regular flow permitted him to run a single train daily
made up wholly of oil cars instead of putting oil cars on trains mixed in with
other types of freight cars. The improvement in scheduling meant that fewer cars
were needed. The resulting lower investment and maintenance costs and the small
cost of providing a locomotive and crew for the daily trip meant that the
railroad could still make a good profit on the rate. Of course, Devereux knew
that if he refused, Flagler could certainly get the same deal from the Erie.
When other Cleveland rfners protested after hearing of the rate cut, Devereux
told them "that this arrangement was at all times open to any and all parties
who would secure or guarantee the like amount of traffic or an amount to be
treated and handled in the same speedy and economical manner...." But no other
Cleveland rfner could guarantee 60 carloads a day.

Armed with
this contract Flagler and Rockefeller first invited their two major competitors
(Clark, Payne and Company and Westlake, Hutchins and Company) to join forces—an
invitation the two readily accepted. Then the Std.crp.nrg approached the other
Cleveland rfners. By the end of 1871 five large and seven small firms had sold
their properties to Std.crp.nrg and the conquest of Cleveland was practically
complete. At the same time to strengthen the position in the all-important
foreign market the Standard partners bought Jabez A. Bostwick and Company of New
York, a leading exporting firm with a rfnery on Long Island. In Cleveland the
larger and more efficient works continued to operate under Standard's control
although the change in command was kept secret. Competent rfners like Payne
and Bostwick became senior executives of Std.crp.nrg. On the other hand,
smaller rfneries not producing specialized products were closed down and their
owners had to find a new business.

Source: Affidavit of James H. Devereux in the case
of Standard Oil Company v William C. Schufield, el al. quoted in
Tarbell. History of the Standard Oil Company 1:277-79; and Case BH 120
"Standard Oil and the Early Development of the American Oil Industry," Harvard
Graduate School of Business Administration, 1961

\\
*2003su:Russian publication with wide circulation offered its opinion on how the great Rockefeller
and J. P. Morgan industrial/financial empires were built in USA, with explanations of why they eventually
failed [TXT]

<>1869:1874; ekn depression
(EC01), the second worst in USA history,
placed a severe strain upon the oil industry

especially at the refining level where capacity was estimated to be three times the average crude oil [nrg.pc] production
in 1870-1871 (EC02)

To avert bankruptcy and to stabilize the chaotic conditions which plagued the industry, a number of rfners, marketers,
purchasers, gatherers, and others formed an alliance of shareholders with
Standard Oil (Ohio)

Those segments of the industry were nearly cxxized (EC03, PL06)

[cxx] Agreements were signed with railroads to control costs and allocate the flow of nrg.pc

tpt agreements with rebates, kickbacks, and secret rates were the largest area of complaint about Standard's
abuse of power

But they were at least partly based on real reductions and costs (PL09)

Competitors often complained that Rockefeller sold below cost

Indeed he did —- below their costs. An example is given in
Greene.STRATEGIES Exhibit S-4

At some time the combination had cornered the market for barrels, staves, and tank cars, had
engaged in local price cutting, and had negotiated advantageous freight rates
from shippers which included rebates on rivals' shipments as well as their own

Liudvig Nobel unveiled Zoroaster, the world's first oil tanker [LeVine.GLORY=xv] [SIE(Gindin,IF Pokhlebkin,VV and
Shepelev,LE)| Also see Halasz,Nicholas|_Nobel: A Biography, and Bergengren,Erik|
_Alfred Nobel, the man and his work]

<>1880s:JPN Meiji
Restoration economic development in its second decade, the beginning of the
"Zaibatsu" era
*--CF=Chaebol (S.KOR)
\\
*--W#1 |
W#2 |
Wki
*--SmfgR4:146 156 158
*--Shibagaki Kazuo, "The Early History of the Zaibatsu"
[E-TXT]
*--Kaoru Sugihara, _Japan, China, and the Growth of the Asian International Economy, 1850-1949 ((UO))
*--G/Sil,R

<>1880:Bahrain Shaikh made
Agreement with British government [G/899ja23 for similar Agreement]

<>1882:USA oil refining capacity 95% under the
control of the giant energy company Std.crp.nrg [This entry from SAC; Std.crp.nrg]

<>1860s:1880s; Kerosene = main product (over 1/2 of all
USA oil output; 4th largest USA export)
*--European office of Std.crp.nrg boasted that oil "forced its way into more nooks and
corners of civilized and uncivilized countries than any other product in business history
emanating from a single source [i.e., this vast new tntn.crp]"

<>1882:1892; USA|
Std.crp.nrg called itself a "trust" [G/fdu]

Novelty = USA bzn beyond stt borders [not really such a novelty]

But scope was = wrl.bzn conducted by a provincial-state-chartered cmp

No nationally chartered crp~ in USA

"The concept of management by owners had evolved to the policy of management by
an active inside board

[Std.crp.nrg Executive Committee] met daily to determine what policies and decisions were
in ‘the general interest’ " [Greene.STRATEGIES:42 blw]

<>1883:PRS.Rth.bnk formed Caspian and
Black Sea Petroleum Co. [Bnito] after Edmond & Alphonsse de Rothschild
visited Batumi [LeVine.GLORY=xv]
*--Nobel family soon followed with their own company centered on the Baku oil fields
*--Nobels transported nrg.pc to the Black Sea port of Batumi by railroad and ptpt

<>1885: German Gottlieb Daimler developed
first workable petrol motor to power a road vehicle [Ecrn]

<>1885:RUS| Large nrg.pc discoveries|
((u&d#1 nxd))
*--RUS was becoming sig. competition for wrl.mkt
*--More than ½ of nrg.p production exported, 2/3 of this to EUR
*--But Std.crp.nrg had not extended its control beyond NYC docks
[Greene.STRATEGIES]
\\
*1880s:>Ragozin,VN|_Neft i neftianaia promyshlennost'|
*1880s:>Simonovich,VF|
G/1921:VNX

<>1886:BMH (Burma, Burmah,
now Myanmar [MMR]) bcm part of the ENG.MPR, a gbx of IND| ENG strategic ggr sense
stretched IND rule eastward to CHN, then along its coasts. It stretched westward
into what we call AfroAsia [ID]
through PKS AFG IRN(Iran) IRQ SaA and EGP and the s.shores of Med.S [MDX.S],
pinching it at its w. mouth at Gibralter
*--That year the Burmah Oil Company|>BMH.crp.nrg| was formed up in SCT.Glasgow
with
the aim to pmp in BMH oil fields [nrg.p.ggr]
\\
*--W#1 |

<>1891:SamM won contract with Rth~ to sell their
kerosene east of Suez
*--Thus Royal Dutch Shell was born [Saul2:143-8 deals with
the petroleum industry | Yergin.PRIZE | Tolf]
*--Shell competed vigorously with Standard in the Far East and Europe
from the 1890s on [Greene.STRATEGIES:37]

<>1891:Muscat and Oman Sultan made Agreement with
British government [G/899ja23 for similar Agreement]

<>1891mr10:NDR and BEL|American Petroleum
Company (51% Standard owned), then two companies (60% owned) in Italy in 1891;
and a 21.45% interest was purchased in a Scandinavian firm late in 1891 [Greene.STRATEGIES]

<>1892:Trucial Shaikhs made
Agreement with British government [G/899ja23 for similar Agreement]

<>1892:Persian [Iranian] oil
prospects were described as favorable in a report issued by a French government mission

News of thousands of seepages and tar pits encouraged the belief
that there was oil in Persia as well as in other parts of the Mideast (EC02)

Not everyone believed it=

Gulbenkian was offered but declined an oil cns
in Persia for £15,000, a decision that rankled him to the end of his days

In his memoirs he wrote, "Between 1895 and 1900 the Concession [cns] which
afterwards came into the possession of the Anglo-Persian Oil Company was a drag on
the market. I submitted this business to my friend Sir Frederick Lane—also. I believe,
to DtdH. But we all thought it was a wild-cat scheme and it looked so speculative that
it was a business for a gambler and not at all for our trio"

No additional venture capital was found for oil exploration in Persia until the 1901
oil fever caused by Spindletop (EC0l) in Texas [Greene.STRATEGIES:238]

<>1893:British arbitrarily drew
the "border" between Afghanistan and India (Pakistan in our time)
\\
*2011fa:WiQ=69
*--Afghanistan's Fateful Border
*2011mr:Standpoint|>Rose,David| "The Man Who Drew the Fatal Durand Line", by
David RoseBackground = Wki |
Encyc. Iranicaonline (NB! Durand’s
assignment to WDC in the critical years of John Hay [ID] )

WHEN SIR HENRY MORTIMER Durand left Kabul in the autumn of 1893, his fellow Britons showered him with
hosannas. Durand, then serving as foreign secretary of Britain's Indian colony, had succeeded in negotiating
the first "scientific frontier" between what are now Pakistan and Afghanistan, a crucial victory in British
efforts to contain Russian expansionism. Queen Victoria herself telegrammed congratulations.

Fears of Russian encroachment into Afghanistan had sparked two wars with the Afghans, in 1839-42
[ID] and 1878-80, and the British believed that drawing
a well-defined frontier and befriending Afghanistan's "Iron Amir," Abdur Rehman Khan (with the help
of plenty of cash), would make the country an effective buffer between Russia and British India. A
deeper motive was also at work. The British were haunted by the bloody Indian Mutiny of 1857 --
Durand himself had lost his mother in the conflict -- and were convinced that taking decisive steps
against the Russians would disabuse the Indians of any notions of British weakness. Durand's biographer
wrote in 1926 that "generations yet unborn will benefit from the Durand Line that he negotiated."

Of course, it didn't turn out that way. "If Durand had not produced his frontier," writes journalist David Rose,
"the conflicts that have plagued the region since the Soviet invasion of 1979 might never have occurred."

[Rose does not reach back for the even greater "plague" or "conflagration" that Durand-style
"Great Game" diplomacy spawned in the 1880s (ID) ]

Dubbed "the strongest man in the Empire" by London's Spectator, the extravagantly mustachioed
Durand was typical of imperial Britons in his slight regard for the people under his sway. In drawing
a line through 1,200 miles of some of the world's most rugged terrain, "it simply did not occur to
Durand that the [native] Pashtuns would object", Rose says. When Abdur Rehman complained during the
1893 negotiations about losing the Waziristan region, for example, Durand gave him half of it --
noting breezily in his journal, "he will have a bit of Wazir country"

The Pashtun ties of clan, tribe, and faith were far denser than the British understood. Barely more
than three years after Durand's triumphant departure from Kabul, Abdur Rehman convened a meeting of
Pashtun mullahs who subsequently crossed back into British India with Afghan arms and launched the
violent jihad of 1897, convulsing most of the northwest frontier. It was only the beginning.

In addition to igniting pro-"Pashtunistan" feeling, the Durand Line contributed to the radicalization
of Pashtun Islam. With the jihad of 1897, Rose says, the teachings of Pashtun scholar-priests "decisively
changed direction", away from their traditional Sufi-inspired emphasis on "the individual's contemplative
relationship with God, and toward one emphasizing strict observance and obedience". Increasingly, militant
Islam "provided tribal leaders with their vocabulary and their ideological rallying point".

<>1894:USA
Progressive Era pundit [ID] published the following
15 paragraphs about Standard Oil and its international dealings with Russian oil interests
[Lloyd.WEALTH:442-9, footnotes excluded and spellings regularized] =

When one of the officers of the [Standard Oil] combination was before [the USA] Congress,
in 1888, he was asked if there had been any negotiations by his associates with the Russian
oil men. [He denied there had been negotiations with the Russians. Furthermore, he said]
that the pipe-line interests of the oil country did not need the regulation by the State
then under debate, but were abundantly safeguarded by him and his associates. [He continued:]

It may not be amiss for me to say that we have had, at different times during the
last several years, most flattering propositions from people who are identified with the
Russian petroleum industry, to come there and join them in the development and introduction
of that industry. We have declined these offers, gentlemen, always and to this day, and
have held loyal to our relations to the American petroleum.

There had been negotiations, after all!

The reports of the United States consul-general at Berlin, in 1891,
transmitted many interesting articles from the German papers concerning the
alliance which it was believed had been made between the Rothschilds and the
American oil combination. A company managed by the great bankers has
obtained a commanding position in the Russian oil business, and the American
and the Russian were even then said to have divided the world between them.
The Berlin Vossishe Zeitung said:

Heretofore the two petroleum speculators
have marched apart, in order to get into their hands the two largest
petroleum districts in the world. After this has been accomplished they
unite to fight in unison, and to fix as they please the selling price for
the whole world, which they divide between themselves. So an international
speculating ring stands before the door, such as in like might and capital
power has never before existed, and everywhere the intelligible fear
prevails that within a short time the price of an article of use
indispensable to all classes of people will rise [442/443] with a bound,
without its being possible for national legislation or control to raise any
obstacles.

But some of the closest European observers have seen reasons from the
beginning to believe that the Rothschilds are in the Russian oil business
only as the agents of the American combination. Thus is freely asserted by
the Continental press. The policy of the Rothschilds has been never to
engage in commercial enterprise on their own account. The tactics used by
the Rothschilds in oil have been an almost exact reproduction of those of
the combination in America. From the first they gave the subject of freights
their special attention. They showed no ability for new or independent
undertakings, but they tried, to use the words of an Austrian-Hungarian
consular report from Batumi in 1889, "following the example of the
combination in the United States, to get the bulk of the Russian petroleum
trade into their hands"; using the large money power at their command for
speculation, freely advancing money for leases and delivery contracts, and
specially acquiring all the available means of transportation. The
experience of the people of Parker is recalled by the statement that the Rothschild
company would leave hundreds of cars loaded with petroleum on the tracks for weeks to
prevent competitors from shipping and from filling their contracts. When the city of
Batumi, in 1888, refused to allow it to lay pipes over the city lands to the harbor, it
was with the enthusiastic approbation of the agitated citizens. The authorities gave
as their reason that through large establishments of this kind the capitalists gained a
monopoly, crushing out smaller producers to the disadvantage of all classes of the
population. In the absence of official investigations, a free press, and civilized
courts -- that knowledge which is not only power but freedom -- it is impossible for
any one in Russia, or out of it, to know the truth as to the relations of the Rothschilds
to the American monopoly. The latest news in the summer of 1894 is of a [443/444] great
combination of Russian and American oil interests, under the direction of the Russian
Minister of Finance [Sergei Witte], for a division of territory, regulation of prices,
and the like. Information of this was given to the world by that minister's official
organ in November, 1893. Thus, says the Hanover (Germany) Courier of November 11th:

With the direct sanction of the Russian government the management of the enormous
wealth that lies in the yearly production of Russian Petroleum will be concentrated
in the hands of a few firms. . . .The Russian government lends its hand for the
formation of a trust that reaches over the ocean—a trust, under State protection,
against the large mass of consumers. This is the newest acquisition of our
departing century.

It was announced that, in pursuance of this plan, the Russians were to be given exclusive
control of certain Asiatic markets. The officers of the American combination are not
easily reached by newspaper men. But when this news came long interviews with them were
circulated in the press of the leading cities, dwelling upon the "Waterloo" defeat they
had suffered, and reassuring the people with this evidence that there was, after all,
"no monopoly." The Russian interests are dominated by the Rothschilds, and if the
Rothschilds are, as these European observers declare, merely the agents of the Americans,
even unsophisticated people can understand the cheerfulness with which the trustees in
New York dilate on their Waterloo at the hands of their other self. Only this could make
credible the report that the world has been divided with the Russians by our American
"trustees," who never divide with anybody. In dividing with the Russians they are
dividing with themselves.

Though it is reported that discriminations by the government railroads of Russia were
used to force the Russian producers into this international trust, still, at worst,
every Russian producer was given by his government the right to enter the pool. But
no similar right for the American producer is recognized by our trust. It admits only
its own members. The others must "sell or squeeze." There is something [444/445] in
the world more cruel than Russian despotism -- American "private enterprise."

One of the conditions said to have been made by the Russian government is
the natural one that the American trust, as it has agreed to do for the
French, must protect its Russian allies from any competition from America.
Extinction of the "independents" has therefore become more important than
ever to the trust. The prize of victory over them is not only supremacy in
this country, but on four other continents. This will explain the new zeal
with which the suppression of the last vestige of American independence in
this industry has been sought the last few months of 1893 and in 1894.
Especially strenuous has been the renewal of the attack on the pipe line the
independents are seeking to lay to tide-water, and which they have carried
as far as Wilkesbarre (sic.).

That pipe line, as it is the last hope of the people, is the greatest menace to the
monopoly. The independents, as they have shown by the fact of surviving, although
they have to pay extraordinary freights and other charges from which the trust is
free, can produce more cheaply than the would-be Lords of Industry, as free men
always do. By means of this pipe line, suspended though it is at Wilkesbarre (sic.),
are now made the only independent exports of oil that go from America to Europe.
Once let the "outsiders" with their line reach the sea-shore and its open roads
to the coast of America and Europe, and it will he a long chase they will give
their pursuers. Everything that can be brought to bear by market manipulation,
litigation, and other means is now being done to prevent the extension of this
line, and to bankrupt the men who are building it through much tribulation. The
mechanical fixation of values, by which the refiners who use this line to export
oil are compelled to meet a lower price for the refined in New York than can be
got for the crude out of which it is made, has been already referred to, and, as
shown above, the same prestidigitation of prices is [445/446] being resorted to in
Europe against the independents of Germany.

Early in 1894 the independent refiners and producers resolved to consolidate
with this pipe line some other lines owned by them in order to strengthen
and perfect the system, and put it in better shape to be extended to
tide-water. This consolidation was voted by a large majority both of stock
and stockholders. But a formidable opposition to it was at once begun in the
courts by injunction proceedings in behalf of one man, a subordinate
stockholder in a corporation of which the control is owned, as he admitted
in court, by members of the oil trust. The real litigant behind him, the
independents stated to the court, was the same that we have seen appear in
almost every chapter of our story, with its brigades of lawyers. "An unlawful
organization," the independents described it to the court, "exercising great
and illegal powers, . . . and bitterly and vindictively hostile to our
business interests." They came into court one after the other and described
the ruin which had been wrought among them, telling the story the reader has
found in these pages.

"It is our hope," they said, "when we once reach the salt-water that there will
be no power there controlling the winds and the waves, the tides and the sun and
moon, except the Power that controls everything. When we once are there the
same forces that guide the ships of this monopoly to the farther shore will guide
ours. The same winds that waft them will waft ours. There is freedom, there is
hope, and there is the only chance of relief to this country. . . . Through three
years of suffering and agony we have attempted to carry on our purpose. . . . You
could have seen the blood-marks in the snow of the blood of the people who are
working out their subscription as daily laborers on that line with nothing else
to offer."

The injunctions asked for by this opposition were granted [446/447] by the
lower court, but the independents took an appeal to the Supreme Court of
Pennsylvania. They first placed their petition for the rehearing in the hands
of the chief-justice on Thursday, May 24th; on Monday, May 28th, the petition
was renewed before the full court; on Thursday, May 31st, the court adjourned
for the summer without taking any action upon the petition. The court in July
agreed to hear the case at the opening of its next term, the first Monday of
October. Section II. of Article I. of the Constitution of Pennsylvania says:
"All courts shall be open, and every man, for an injury done him in his lands,
goods, person, or reputation, shall have remedy by due course of law, and right
and justice administered, without sale, denial, or delay." To guard against
the injustice which might arise by the granting of special injunctions by the
lower courts—like that granted in this case -- which might remain for months
without remedy, the Legislature, in 1866, enacted a law which reads as follows:
"In all cases in equity, in which a special injunction has been or shall be
granted by any Court of Common Pleas, an appeal to the Supreme Court for the
proper district shall be allowed, and all such appeals shall be heard by the
Supreme Court in any district in which it may be in session."

As if there had not been enough to try these men, misfortune marked them in
other ways. The Bradford refinery of the president of their pipe line was
visited by a destructive fire during these proceedings in court. The
Associated Press despatches (sic.) attributed the fire to "spontaneous
combustion", whatever that may be. But in another newspaper an eyewitness
described how he saw a man running about the works in a mysterious way just
before the flames broke out. On the same day, by a coincidence, the main
pipe of the independent line was cut, and the oil, which spouted out to the
tree-tops, was set on fire at a point in a valley where the greatest
possible damage would result, and the telegraph wires were simultaneously
cut, so that prompt repairs or salvage of oil were impossible. The Almighty
is said to favor the heaviest battalions, [447/448] and accident, if there
is such a thing, seems to have the same preference, as has been shown in
many incidents in our history, such as the mishaps to the Tidewater pipe
line, and the Toledo municipal gas line.

An intimation is given in the Continental press as to one of the motives under
which the Russian government acted in promoting the alliance between the Russian
and American oil men. It desired, it is said, to secure the influence of the
powerful members of the oil combination in favor of certain plans for which
Russia needed co-operation in America. There has been nothing for which the
Russian government has so much needed "sympathetical (sic.) co-operation" in
America as for the ratification of the Extradition Treaty. The Russian government
has obtained this ratification, and obtained it in a way which indicated that
some irresistible but carefully concealed American influence was behind it. The
New York World, in its editorial columns of May 25, 1894, made the suggestion
that the power behind this treaty of shame was that of the oil trust, earning from
the tsar the last link in its chain of world monopoly. It asked if it was the
influence of the oil combination that induced the Senate's consent to this
"outrageous treaty." "Was this one of the conditions upon which that monopoly was
permitted to secure its present concessions from Russia? Did it wield an influence
in the Senate like that which the sugar trust has since exercised, though for an
advantage of a different kind?" The Philadelphia Press points out that the Russian
government had long and unsuccessfully sought to obtain the ratification of this
treaty, but at last got it quickly and quietly. Did the oil combination, it asks,
"succeed in bartering the character of this country as a political sanctuary for
the monopoly of the world's markets?" Seldom has any public measure been so
universally and so indignantly condemned in America as was this proposal to use the
powers of Anglo-Saxon justice to return men who were accused only, and were,
therefore, legally [448/449] innocent, to be tried without jury, counsel, publicity,
or appeal. Never has public opinion availed less. The Federal executive refused
even to delay the ratification in deference to the sentiment against it. Those who
were active in the agitation against the treaty found something inexplicable in the
unresting and unlistening (sic.) relentlessness with which it was pushed through.
Napoleon said that in fifty years Europe would be all Russian or all republican. Even
he did not dream that republican America would become Russianized (sic.) before Europe.
The San Francisco Call of March 3, 1894, discussing the report that a commercial ??
treaty with China was under consideration at Washington, says the negotiation is in the interest of the oil combination. It warns the public that the trust is willing to reopen the opium trade in reciprocity to China for better terms for the admission of American petroleum. This free trade with China and Russia in the souls and bodies of Russians, Chinese, and Americans would add only another instance of the many manipulations of government which this combination has successfully attempted in all parts of the world—in the tariffs of France, Germany, Cuba, Canada, and our own country; in the raising or lowering of the governmental requirements as to explosiveness of oil sold the people in England and the United States, and in the subsidy legislation by which it got from Congress for its ocean steamers a privilege rigorously denied by law to all other citizens.

<>1895:USA nrg.pc mkt at an end as u&d dominated bzn from nxd through rfn
*--Crude no longer on the open mkt [W&D,1:619-21]

<>1898:England knighted SamM for services to the Empire =
Shell ship freed a Navy warship that ran aground in the Suez Canal [Greene.STRATEGIES]
*1898 salt water appeared in Shell.crp.nrg wells and production fell. [drl pmp & rfn=]
DtdH became interested in production. As he relates it, there were then two methods of drilling
and refining in existence—Russian and American—and the American method was far better || Royal
Dutch's drillers and refiners had been imported from America. But they
were unscientific, practical oil men, "often exceedingly dictatorial gentlemen
of the roughneck breed, with their blue shirts, riveted trousers, and bowler
hats—a costume so general among them that it practically amounted to a
uniform.... "3I DtdH decided they had to go and replaced them
with geologists, chemists, and engineers trained in Europe, often in the
Netherlands. Royal Dutch was the first Major to use scientists in production
(PL12). though geologists had been used in Russia for 35 years and Standard had
begun to employ chemists in refining as early as 1885. " The application of
Dutch technical expertise (EC18), in its golden age like other European science
late in the nineteenth century, gave Royal Dutch a competitive edge and gave the
Dutch an identity as suppliers of expertise on the technical areas of production
and refining thai is very much alive at Royal Dutch/ Shell today." It was a
brilliant move by DtdH. New production was found, including Sumatran nrg.pc
with good gasoline content. With supplies of Russian kerosene DtdH had
begun acquiring in 1898 Royal Dutch expanded and began undercutting Shell in the
Dutch East Indies, [Greene.STRATEGIES:215-16]

In 1900 Kessler died, leaving as his last wish that DtdH be given complete charge
of Royal Dutch. The directors agreed. In that year he obtained his first
"working agreement" among Dutch producers. He decided "whenever and wherever
possible, a definite system of cooperation with smaller trade rivals must be
made an essential part of our business policy—in fact, our main working plan"
(PLI3). "Quality and service" he stated, "are the only sure foundations on which
competition can survive." Price competition was not competition at all; it was
"annihilation" (PV00).' Considering Standard's price policy, this was
not an exaggeration. Standard strove to maximize market share by eliminating or
absorbing competitors. To do this it often lowered prices in the product or area
most important to a competitor while keeping them high elsewhere, subsidizing a
war in one area from profits in another. For example Standard sold gasoline in
America at £7 17s. 6d. while charging £4 10s. in Europe and also paying the
shipping cost to Shell on a charter.Though DtdH (PV11) detested
this kind of price competition, even he recognized its value: "If our now
friendly competitor. Std.crp.nrg, and one or two more had not gone hitting us
by price cutting., .the Royal Dutch might quite conceivably have been a small
company, almost unheard of. today."'6

"Working agreements" to keep prices and business steady
were DtdH's response to Standard. The Asiatic Petroleum Company in 1903 and
then the Royal Dutch/Shell combination [RD/Shell.crp.nrg] described below were such agreements: "it
was really close cooperation, and never absorption, at which we aimed," he said
(PLI4)(SR02).17 From this viewpoint one can see how Royal Dutch/ Shell
became a 60:40 joint venture. This policy stands in contrast to that of Standard
of paying generously and decentralizing but never without control." [Greene.STRATEGIES:216]

<>1898: Egypt, Nile River at Fashoda | British forces under Lord Kitchner
defeated French troops in an imperialist scramble for authority over North African territory
*--This defeat compelled the French to accept the English plan for an Anglo-French Entente Cordiale against Germany [Ecrn]

<>1899: British treaty with Al-Sabah
[?Subah] family of KWT blocked
BGD.rrd from reaching the PER.G [Ecrn]
*1899:BMH.crp.nrg bgn wtpt frm MMR to IND
*--Thus the ENG Committee of Imperial Defense [>ENG.CID] noticed nrg.p issues.
BMH only large ENG nrg.p crp in rgn
*--British National Archives www
ndx to ENG.CID RXV up to 1914

<>1899ja23:Kuwait Shaikh Mubarak signed Agreement
with the British Government [Source = Chisholm.First=85]
[cns]
*--Similar Agreements were made by the British Government on 3 earlier occasions
= G/1880:Bahrain/| G/1891:Muscat/| G/1892: Trucial
*--The Kuwait Agreement was to terminate in 1961 when Kuwait became an
independent State. Translation =

Praise be to God alone (lit. in the name of God Almighty) ('Bissiln Illah Ta'alah Shanuho').

The object of writing this lawful and honourable bond is, that it is hereby covenanted and agreed
between Lieutenant-Colonel Malcolm John Meade, I.S.C., Her Britannic Majesty's Political Resident,
on behalf of the British Government, on the one part, and Shaikh Mubarak­bin-Shaikh Subah, Shaikh of Kuwait,
on the other part, that the said Shaikh Mubarak-bin-Shaikh Subah, of his own free will and desire, does
hereby pledge and bind himself, his heirs and successors, not to receive the agent or representative of
any Power or Government at Kuwait, or at any other place within the limits of his territory, without the
previous sanction of the British Government; and he further binds hilnself, his heirs and successors, not
to cede, sell, lease, mortgage, or give for occupation or for any other purpose, any portion of his territory
to the Government or subjects of any other power without previous consent of Her Majesty's Government
for these purposes. This engagement also to extend to any portion of the territory of the said Shaikh Mubarak
which may now be in the possession of the subjects of any other Government.

In token of the conclusion of this lawful and honourable bond, Lieutenant-Colonel Malcolm John Meade, I.S.C.,
Her Britannic Majesty's Resident in the Persian Gulf, and Shaikh Mubarak­ bin-Shaikh Subah, the former on
behalf of the British Government, and the latter on behalf of himself, his heirs and successors, do each,
in the presence of witnesses, affix their signatures, on this the 10th day of Ramazan, 1316,
corresponding with the 23rd day of January 1899.

sd/- E. Wickham Hore, Captain, I.M.S.
sd/- J. Calcott Gaskin.
(L.S.) Muhammad Rahlln-bin-Abdul Nebi Saffer.
(Sd.) Curzon of Kedleston. Viceroy and Governor-General of India.
Ratified by His Excellency the Viceroy and Governor-General of India at Fort William
on the 16th day of February 1899
(SEAL)
(sd.) W. J. Cuningham, Secretary to the Government of India in the Foreign Department.

<>1899:1914; SamM first formally tried
to persuade the Navy to test oil as a fuel, the fuel his own fleet used
*--Over 15y stretch, with Lord Fisher at the Admiralty,
SamM pioneered the use of oil as marine fuel and tried to get the Navy to convert to oil [Greene.STRATEGIES]

<>1900:Dutch East Indies
production encouraged SamM to renew RUS purchase contract with the Rth~
*--Shell expanded everywhere and
determined to market gasoline in Europe by purchasing a German company from the Deutsche Bank [Greene.STRATEGIES]

D'Arcy (PV01) can be thought of as a British version of Horatio Alger. In the 1880s he
emigrated to the British Imperial territory, Australia, where he made a fortune in gold mining. He then retired to a life of
luxury in England [Greene.STRATEGIES:238]

Now the British Minister to Teheran, a Persian general, and two French geologists from the
French mission a decade earlier persuaded D'Arcy to carry off the negotiations with the Persians for the cns

The cns was written in Persian and slipped past [Russian] scrutiny on May 28, 1901 when
the only Russian diplomat who could read Persian was away from Teheran

[The D'Arcy cns] covered 480,000 square miles, an area almost twice the size of Texas
and with, as it turned out, twice the rzv~ of oil

To appease the Russians the five most northern provinces, which bordered Russia, were excluded

The Persian government was to receive £20,000 cash, £20,000 of shares, and 16% of the
net profits of the company which would develop the cns

In addition the Shah and other notables received £50,000 worth of shares, increased
to £65,540 by 1914 (PL03)

It was understood that the British Minister to Teheran who arranged the negotiations was
not to be forgotten, should the venture prove profitable

Thus the D'Arcy cns was the product of bribery, intrigue, and subterfuge—practices for
which the British blamed the weakness and corruption of the Persian government
(EC04) but to
which they acquiesced (PL03)

An analysis by Zuhayr Mikdashi [G/Mikdashi] in 1966 did not find the terms unfair to Persia [Greene.STRATEGIES:238]

<>1901+:IRQ cns~ sought from
O.TRK by D’Arcy

<>1901fa:Shell was Britain's largest oil
company, second only to Standard worldwide
*--Shell now poised to enter Europe, the only
company with worldwide sources of nrg.pc [Greene.STRATEGIES]

<>1902:1903; LND Lord Mayor was
SamM (3rd Jwx to hold that post)

<>1903:1914; RUS Baku|Powerful
cxx Nobel/Rth "Nobmazut"
controlled sale of about 80% of internal RUS nrg.p mkt and over half the wrl mkt
[LeVine.GLORY=xv] and thus played big role in irx nrg.p development
*--G/876:Baku | F/1918je blw

<>1904ja:D'Arcy's Persian adventure threatened economic ruin when an early
discovery of oil [nxd u&d#1] on his cns dried up

D'Arcy approached the Rothschilds in Paris [PRS.Rth] and other groups to discuss the possible sale of the cns

As the "second industrial revolution" muscled up in these years,
nation-states became important participants in "free-market" enterprises

This same activist Lord Fisher would soon become an active figure among
those who converted the Royal Navy from coal to oil

D'Arcy's next hurdle thus was political and economic

The authority of the Shah was minimal in the southwest part of Persia where the company wanted to drill next

The territory was controlled by the Bakhtiari tribesmen who demanded and got £3,000 per year
for protecting company property plus a 3% equity interest in any companies which exploited oil
in their territory (PL03)(H02)

From December 1907 through September 1909 the British government provided 20 soldiers, led
by Wilson, to protect the drillers (EC06)

From its beginning the company had the interest and support of the British
government (EC05)(EC06)(R04)(PL05)

Lt. Arnold Wilson, a political officer in Persia, expressed British fears
of BMH's motives =

What is to prevent CS Ltd. from selling D'Arcy's rights to an American or German company?
The directors of CS Ltd. are Scotsmen of the hard-headed, short-sighted (PV03)
sort who would not hesitate to do so if they saw a profit..... the Burmah Oil
Company took a financial interest in CS Ltd. because they did not want a rival
company within reach of India, where they have something like a monopoly at
present.

An equal fear was the cash-strapped D'Arcy might have to sell to whomsoever bid highest

*1906wi:US HoR introduced "Hepburn Bill" (Wm. P. Hepburn
introduced it) declaring ICC jurisdiction over ptpt~ and holding them to be
pbl.tpt. [Johnson.ptpt=24-33]<>1906ap:Shell.crp.nrg transformed by
SamM sellout to DtdH and a new twin giant was born
*--Armenian-born (Ottoman Empire subject) and now British citizen,
Calouste Gulbenkian played key mediating role & henceforward came to be known as "Mr.
Five Percent" [W-ID]

<>1907se21|NYT rpt
re-Std.crp.nrg vs-fdu investigations [TXT]=
"Standard Oil tells who has its stock | List made public for the first time in
Government's Suit to dissolve the Trust | Its grip on export trade | Agreement
produced preventing independents from selling for export save to the Standard"

<>1907de:1909se; Iran|
British government provided 20 soldiers, led by Wilson, to protect BMH.crp.nrg drillers
(EC06)

From its beginning the company had the interest and support of the British
government (EC05)(EC06)(R04)(PL05) as a British controlled source of oil for its navy (PL02)(PL04)
and a counter to RUS influence in Persia (EC03)

<>1908my28:Iran first major oil discovery
[u&d#1 nxd made by BMH.crp.nrg] on D’Arcy cns [Greene.STRATEGIES]

Due to inspiration, leadership, scientific ability, and single-mindedness of
purpose (PV02) of the man D'Arcy earlier selected as his field manager. George Bernard Reynolds

[Howard.Hunters:45-56 & 71-82]

Reynolds at age 50 overcame every physical and political obstacle with
natives, terrain, equipment, labor, and home office for seven frustrating and disappointing years
in his determination to find oil

A self-trained geologist and civil engineer, he could not be restrained from drilling
at Masjid-i-Sulaiman (Mosque of Solomon) in the Madan-i Naftun (Plain of Oil) where the
first major discovery was made

<>1909ap14:Persia [Iran]|
BP.crp.nrg ID
was created under its original name, the Anglo-Persian Oil Company,
Limited [AP.crp.nrg] -- clearly signalled that it was a British, and thus colonial, company (PL01)
founded to develop newly discovered [nxd] Persian oil fields (PL02) =

1908my:In southwest Persia on a huge cns granted to D'Arcy in 1901 [G/1901my28]
(R08) and
covering 4/5 of Persia great fields of oil were discovered

This was the third and successful effort to find oil in Persia [Iran] [Greene.STRATEGIES:237] G/1872 and 1889

<>1909ap14:Iran|
Anglo-Persian Oil Company (>AP.crp.nrg| aka >APOC) was formed with capital
investment of £2m -- £1m for common stock (R05) provided by BMH.crp.nrg, the rest by
sale of 6% preferred shares to the public (R09) [Greene.STRATEGIES:239/240]

GwyCh left no personal imprint on the company, but as Sampson.SEVEN=65 notes, BMH
executives "... contributed part of their character to the new cmp. Scots engineers
and accountants dominated the headquarters, with a mixture of adventurousness and meanness"
(PV03)

1909:D'Arcy was eased out by the Scots. D'Arcy's wife felt his contribution should have been
recognized in the name of the company, but instead he received reimbursement for all he had
spent plus £900,000 worth of stock in BMH.crp.nrg, and the satisfaction of having organized
not one, but two, of the greatest discoveries [nxd] in the history of the Empire

Reynolds was the next to go. Having found oil, Reynolds felt entitled to command. Thus conflicts arose

Following common practice of the day BMH hired a firm of "managing agents" to oversee
its AP.crp.nrg

1911fe: GryCh and James Hamilton became the first directors to visit Persia, investigated
the discontent, and dismissed Reynolds

Neither D'Arcy nor Reynolds ever received proper recognition for their service to the Empire

Reynolds went to VNZ and was forgotten

Reynolds did not fit well with the "style" of the new managerial phase of economic
modernization

<>1911oc:ENG| Winston Churchill (1874-1965)
became First Lord of the Admiralty until 1915, after the disastrous WW1 Gallipoli campaign
[SAC.ID | Wki].
He later became head of the British Imperial Colonial Office (1917ap-1922oc)

Churchill was a life-long promoter and defender of the British Empire

Churchill was determined to convert the English navy from
coal to petroleum

From the beginning he opposed the "foreign" Shell.crp.nrg and came out in
favor of AP.crp.nrg (EC14a) [=Greene.STRATEGIES=]. Ironically, Shell's Samuel Marcus, a
perfectly "patriotic" British subject, was one of the first to push for this
conversion

"Against this [the dominance of Standard and Shell],... the Burmah Oil Company, with
its offshoot the AP.crp.nrg, is almost the only noticeable feature."

Of Shell.crp.nrg Churchill said, "It is their policy...to acquire control of the sources and means
of supply and then to regulate the production and the market price... We have no quarrel
with Shell. || We have always found them courteous, considerate, ready to oblige, anxious to serve
the Admiralty and to promote the interests of the British Navy and the British Empire -- at a price.... The
only difficulty has been price. On that point of course we have been treated with the full
rigor of the game... we shall not run any risk of getting into the hands of these very
good people." In other words, the issue was official English control of
petroleum finances

1911no03:LND| AP.crp Managing Director (1914-1926) Mr (later Sir Charles and Lord) Greenway [>GryCh] wrote
to the "British Political Agent in the Gulf" (the official government agent,
subordinate to British Political
Resident who was the colonial administrator of the whole Persian
region [Wki] )

Greenway inquired if local Kuwait Sheikh Mubarak might be willing to
grant "propecting license" to AP.crp

He sought to gain a significant an exclusive geo-political advantage over Shell and Royal Dutch
crp.nrg

The Political Agent replied that conditions were too disordered at this time [Chisholm.First:86-7]

1912-1913: Churchill appointed and sent to Persia an independent blue
ribbon Slade Commission, including John Cadman [Wki
ID]. Churchill, with
Cadman's support, pushed the British government toward direct involvement in
that emerging industry and close association with AP.crp. The Slade Commission reported
favorably on Persian (including Kuwait) oil fields

Cadman then a professor of petroleum, civil servant, and Britain's leading oil expert [Greene.STRATEGIES
(PV06)]

1921:He joined AP.crp.nrg. Eventually "Sir"

1927:He succeeded GryCh as AP.crp chairman and held that position till death in 1941 [Chisholm.First:175 |
Greene.STRATEGIES]

Churchill was suspicious of foreign competition and the possibility of
foreign monopoly control of oil, especially in view of the heavy clouds of
war gathering over the major imperialist European states
[EG]

He was not opposed to monopoly or governmental involvement in principle

He promoted English monopoly and intimate goverment intrusion into the
business of the fast expanding private oil company, AP.crp

Soon AP.crp became BP.crp.nrg ID
and mainly a government-dominated enterprise

Shell.crp.nrg however also supplied England in WW1

<>1912+: Iran| GryCh of
AP.crp.nrg pressed the Foreign Office for a subsidy, arguing that Shell.crp.nrg was a foreign company whose loyalty
was questionable and whose operations represented a marketing monopoly
*--The Foreign Office was convinced but the admirals were wary of involvement and interested in price
*1911:A public outcry had been raised against high oil prices [Greene.STRATEGIES]

<>1912: Deutsche Bank secured "right of way" mineral rights all along the line of the
BGD.rrd, including the area today containing the oil-rich Kirkuk fields of IRQ [Ecrn].
Deutsche Bank was constantly on the official English mind as a threat to
English imperialist dominance and as a powerful financial backer of Shell)

<>1913oc:British Political
Resident in Persia and Kuwait Sheik Mubarak formally agreed that no Kuwait oil
concession would be given there except to a person designated and recommended by
the British Government
*--Iran AP.crp.nrg source
rfnery on Abadan.I completed [Greene.STRATEGIES (PL07)]

<>1914:IRQ cns~ obtained by
AP.crp.nrg when it purchased 47.5% interest in the TRK.crp.nrg (RI4e) [Greene.STRATEGIES]

<>1914:Churchill convinced Parliament to bailout
AP.crp.nrg (PL05)(PL08),
investing £2 million for just over 50% of the company (EC14b) (R14a) [=Greene.STRATEGIES=]

His desire, like Lord Fisher's, was [nrg.c=] to convert the Royal Navy to
oil because oil-fired ships were much faster, more efficient, and had greater
range than coal-fired ships

But Britain had no quantities of oil (EC05) and, until discovery [nxd] in Persia, the only
oil in the Empire was in Burma and Assam

AP.crp.nrg got capital in exchange for an oil supply contract (R14a,b, PL04) for the Navy at a cut-rate price.

Some of the oil companies' greatest difficulties have come from navies who, since this
precedent, have seemed to feel entitled to a cut-rate price

Examples are

Socal's difficulties after WW1 over price on the West coast, the post-WW1 fear of shortage which led to
[nvy.rzv] the establishment of the Elk Hills
Naval Reserve in California and a court battle with Socal over its perimeters, and

the U.S. Navy's attempt to buy into SaA in 1943 (see Chapter 7 [Greene.STRATEGIES:241])

The [English AP.crp.nrg] agreement stipulated that the company must remain an
independent British company and every director must be a British subject (PL01)

To represent its ownership the government was to appoint two directors with
veto power over issues of national strategic importance

But otherwise [?!] the government was not to interfere with the conduct of the business (PL08)

If this distinction was clearly specified in the government's agreement with the company, elsewhere the distinction of
being an autonomous company majority owned by the British government was blurred

"Even in Persia," Lord Strathalmond, chairman from 1940 to 1954, said, "they were never quite convinced
that I had not come straight from Whitehall."

In Iraq the company and the British government were thought to be one and the same

As events show, this special business-government relationship was both a strength (R14c) and a weakness
(H01) [=Greene.STRATEGIES]

<>1914ap:English Foreign Minister Earl Grey
accompanied King George to Paris to meet France's President Poincare and Russia's Ambassador; the
three sealed a secret military pact against the German and Austro-Hungarian empires [Ecrn]

<>1919my:In New York City and London -- as
the Versailles Peace Conference was being held outside Paris -- members of the J. P Morgan
group, Lord Lothian, Lord Cecil and others of the British Roundtable group
[Wki] created two sister organizations = the
influential Royal Institute of International Affairs and the New York City Council
on Foreign Relations [>CFR | W#1]

The 19th century of hostility and competition between England and USA
[ENG.vs-USA] had now certainly become "the special relationship"

[It] was to dominate world affairs over the century ahead [Ecrn]
\\
*1885fe26:SAC
*--Will Banyan, "A Short History of the Round Table" [E-TXT]
*--Quigley-based "conspiracy theory" about Round Table [You-Tube]

<>1919:USA TX Burkburnett and OK Ardmore oilfields | Vida and Erle P. Halliburton formed a company which developed methods of cementing oil
wells
*--Soon their company was named New Method Oil Well Cementing Company
*1920ja|USA OK, outside the town Wilson, Skelly Oil Company well came
a gusher, spewing untold barrels of oil into the air. [Hlb.bdg.crp=] Halliburton,Erle and his drilling company, New Method Oil
Well Cementing Company capped the gusher and launched a legendary company [Briody.HALLIBURTON:8-13]
*--Year later, they were centered in OK Duncan
*1924:"New Method" renamed Halliburton Oil Well Cementing Company (HOWCO)

<>1920:Iran| AP.crp.nrg purchased RUS oil
cns for £100,000 and began negotiating with the Persians for the other two northern provinces [Greene.STRATEGIES]

Brigadier Reza Khan, led the revolt and established a strong military
government

[He] was proclaimed Shah of Persia, the first of the Pahlavi dynasty

In spite of their subsidy of the former government, the British and
AP.crp.nrg remained
neutral and enjoyed cordial but distant relations with the new Shah until 1928

when profits fell with the worldwide nrg.pc glut (EC28a)

Payments to the Persian government fell to £500,000 from £1.4 million the year before

They rebounded in 1930 but again fell from £3 million in 1930 to £300,000 in 1931 [Greene.STRATEGIES]

<>1921mr21:Cairo Conference
convened by British Colonial Minister Winston Churchill [Ecrn]
*--Churchill (seated center) titled this
pix of Cairo Conference attendees "The Forty Thieves"
*--Top Mideast experts such as T.E. Lawrence and Percy Cox [Wki] attended
*--Gertrude
Bell [ID] is the only woman in
the picture
*--The Colonial Office's Mideast Department was formally created
in connection with the post-WW1 Mandate system
[ID]
*--And the grounds were laid for tragic events over the next near century [hop
to SAC LOOP on Iraq]
*--Thus was acknowledging the new strategic import of the oil-rich Mideast
\\
*2004:NYC,Barnes&Noble|>Reeva Spector Simon|_Creation of Iraq: 1914-1923
| *2005my/je:FoA a brief review [TXT]
*--Wki

<>1921no22:Iran(Persia)
cancelled RUS cns, on basis of new treaty with USSR, which renounced all
previous RUS agreements, including cns~

On the same day Iran offered Std.crp.nrg.NJ a cns covering all five northern provinces

As Jersey could not build ptpt~ across the Soviet Union,

it accepted AP.crp.nrg as an equal partner

to gain ptpt rights across Persia and

to improve its chances of entry into Iraq where AP.crp.nrg was considering sale of half of its interest [Greene.STRATEGIES]

<>1922:Iran Persian parliament annulled
Std.crp.nrg.NJ's
cns, [mlf=] allegedly because it had declined to pay backsheesh (bribes) to political circles in Teheran [Greene.STRATEGIES]

<>1922je22:BRL| Rathenau was assassinated by two "right-wing extremists" [Ecrn]

<>1922jy:SSR the target of attempted hostile united front of many nrg.p.cmp~, but
Shell.crp.nrg tnx bargaining with SSR [Sampson.SEVEN=83]

<>1923ja11:French troops occupied critical bordering German regions, Essen
and the Ruhrgebiet
*--France claimed that Germany had breached war reparations agreement made at Versailles
*--This act of aggression shut down German industry and triggered the infamous
"Weimar inflation" crisis [Ecrn]

<>1923no:GRM | Hjalmar Schacht was appointed Commissioner of
the Currency. Schacht was a close friend of Montagu Norman, the Governor of the Bank of England [Ecrn]

<>1923de:GRM government,
led by Gustav Stresemann, bowed to pressure exerted from London and New York bankers and refused to appoint
Karl Helfferich, unanimous choice to become new Reichsbank President. Hjalmar Schacht assumed the post instead. Helfferich died in a
"suspicious" train accident some months later [Ecrn]

<>1924:AP.crp.nrg began to explore for oil worldwide and made a small
discovery (R24b) in Argentina [u&d#1]
*1924:ENG granted diplomatic recognition to the USSR
*1926:AP.crp.nrg made a noncommercial strike in Albania
*1930:Both were abandoned [Greene.STRATEGIES]

<>1924:1927; As more SSR
nrg.p flowed into zpd, Shell.crp.nrg tried to go against the flow and make agreement
w/SSR [Sampson.SEVEN=85]
*--Broke off| These were years in which mxx campaign vs-Std.crp.nrg and Teagle for "trading with CMN" had impact
*--For its part,SSR ws playing one crp vs-another| Std.crp.nrg suffered in this game [G/1941:42]

<>1924ap:German government was forced by economic collapse to
accept the terms of the Dawes Plan for war reparation payments to USA, Britain and France
*--Charles C. Dawes, who
drafted the plan, was an associate of J.P. Morgan [Ecrn]

<>1925:IRQ cns was arranged which called for a royalty of 4s gold
per ton and a minimum rental of £400,000 / year in gold. Bribes were paid (PL03), and threats were made by the British
government (EC06) before the cns agreement was signed. It was the first tonnage-based royalty in the
Mideast (R25) [Greene.STRATEGIES]

<>1927oc14:IRQ Kirkuk oil discovery, AP.crp.nrg's third major discovery [u&d#1].
It demonstrated its growing expertise in finding oil (R27c). A local rfnery was built [Greene.STRATEGIES]

<>1928:SCT| Achnacarry Agreement| Royal Dutch Shell,
AP.crp.nrg and the American Rockefeller group formally signed their "truce" which they called the Red Line Agreement
and which divided the entire Mideast among them [Ecrn]

The Red Line agreement was a British inspired device to contain American competition

Agreement among AP.crp.nrg with Shell.crp.nrg and Std.crp.nrg.NJ, and
soon included Gulf.crp.nrg, Socony-Vacuum and others. Purpose =

To divide markets and

Forestall price competition downstream

Three other similar agreements between 1928 and 1934

Greene.STRATEGIES:222 = The Achnacarry agreement of 1928 (R28c), coming
after the failure in 1927 to control overproduction in USA. Main parties =

It was extended in 1932 to include the following in the "Heads of Agreement for
Distribution" agreement (R32)

Socony-Vacuum

Atlantic Refining

Gulf.crp.nrg

Sinclair, and

Tex.crp.nrg

AP.crp.nrg was frank about its purpose. Its chairman stated in 1927, "It is in
the interests of Persia, as it is of this company, that production should be steadily
controlled —- that is to say, regulated in conformity with the world's demands" [Greene.STRATEGIES]

In light of the wasteful results of competition under the rule of capture and the distress of the
Great Depression (EC29)(EC30) one cannot entirely condemn AP.crp.nrg's open aversion to competition (PL21)
[Greene.STRATEGIES]

which was born in its identity (PL14) and

its special relationship with the British government (PL05)(R14c)

The USA tradition of vs-fdu and adversary relationships between
business and government was absent

In AP.crp.nrg's view, "its close relations with the British government and its identity
as an instrument of social policy of that government, rather than competition, ensured
socially responsible behavior" [Greene.STRATEGIES]

AP.crp.nrg sold half its share of the TRK.crp.nrg to a group of
American companies led by Std.crp.nrg.NJ

[T]hey agreed to limit themselves to a joint efforts within the boundaries of the old Ottoman
Empire

C.S. Gulbenkian, an Armenian with political connections in Turkey acted as broker in
the sale. He marked the red line during negotiations

It was a containment policy. As Gulbenkian noted, "...it was sounder and higher policy
to admit the Americans into the Turkish Petroleum Company, instead of letting them loose to compete
in Iraq for cns~ when in reality the Company had a very weak grip there" [Greene.STRATEGIES]

<>1931my:OST WEN|Creditanstalt collapsed, triggering domino collapse
of Austrian and German banking and industry
*--Sharp increase in unemployment, and the rise of political extremism [Ecrn]

<>1932: Paris negotiations between Sweden and Germany to extend major
new loan to the German government were interrupted when Swedish industrialist and banker Ivar Kreuger was found dead
under suspicious circumstances in his hotel room [Ecrn]

<>1932: Independent British and Indian group, the
British Oil Development Syndicate (BOD.snd), acquired a 75-year cns frm IP.crp.nrg (formerly TRK.crp.nrg)

1937:With government approval, attained control over IP.crp.nrg after BOD was unsuccessful [??]

1940:prl zbx in these fields forced crp hand

1941:Established the Mosul Petroleum Company (R37) to operate the bzn following the zbx (R40)

To complete its control of IRQ, an Iraq Petroleum affiliate, the Basrah Petroleum Company (R38c)
obtained, without competing bids, a 75-year cns on the remaining portion of Iraq
bordering KWT [Greene.STRATEGIES]

1. The 1925 tonnage royalty agreement negotiated with IRQ (EC25) set the pattern for other
cns agreements in the Mideast until 1948

It was far simpler to administer and did not provoke disagreements as did the net profits type of cns

It freed the company from obligations on profits earned downstream or in other places

It gave the government a more dependable income

The level (4s gold/ton) was attractive, being equivalent to about one-eighth of the estimated value of
Mideast
nrg.pc in the PER.G, a level similar to the one-eighth royalty in general practice in the U.S.

<>1938mr18:MXO xfxx- or "ntn.sttized" nrg.p [Wki
| Greene.STRATEGIES] Nationalized holdings of the Mexican Eagle Petroleum Co. [Wki]
and other Dutch, English and US holdings. Eventually created PEMEX [Wki]

<>1938:KWT| AP.crp.nrg and Gulf made major discoveries
on the Arabian side of the PER.G [u&d#1] where geologists earlier thought there was
no oil
*--AP.crp.nrg was now positioned in 3 of the 4 huge Mideast producing areas, but nowhere outside that
region [Greene.STRATEGIES]

<>1939mr:Bank of England
Director, Montagu Norman, saw to the transfer of Czech gold to Nazi GRM which at
this time occupied Czechoslovakia [ID]
*--1939no:In the first weeks after the outbreak of WW2 on the Western Front (and
after England had declared itself at war with Nazi Germany), Norman again
transfered Czech gold from the Bank of England to Nazi banks
[Wki]
*--Ecrn claims that Norman also transfered funds from the Bank of England
earlier, in 1933, with the purpose to support Adolf Hitler in the early months
of the Nazi radical-rightist and dictatorial regime
\\
*--[W]

<>1940:USA
Pittsburgh coal smoke documented in photos [W#1
|
W#2 |
W#3]
*--Try to search out on the internet Margaret Bourke-White's 1955 photo of smoky
Pittsburgh from the air. She's a great photographer
*--[Return to main SAC LOOP on "coal"]

<>1944jy01:jy22: Bretton Woods monetary system [fnc] devised what came to be called the Bretton Woods System*--The International Monetary Fund [IMF] was established [Ecrn]
[Wki]
*--The New Hampshire resort where the deliberations took place
[pix]
*--Britain's Lord Keynes and American Deputy Treasury Secretary Harry Dexter
White worked out the final details of a new postwar world order
\\
*--[Wki]
*--Council on Foreign Relations economist Benn Steil|_The_Battle of Bretton
Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World
Order| ((CFR rvw
))
*--Clark.Petrodollar

<>1946mr:Winston Churchill traveled to President Truman's home
state, to Fulton, Missouri, to unveil postwar British proposal for Cold War against Soviet Union
[Ecrn] [ID]

<>1946+:After the war the British pushed
the Russians out of Iran with difficulty and installed the 22-year-old son of Reza Shah as a puppet (EC45)

In Churchill's words. "We have chased a dictator into exile, and installed a constitutional sovereign
pledged to a whole catalogue of long-delayed, serious minded reforms and reparations"

But the new Shah felt differently =

We were an independent country, and then all of a sudden the Russians invaded our country
and you British took my father into exile. Then we were
hearing that the oil company was creating puppets—people just clicking their heels to the
orders of the oil company—so it was becoming in our eyes a kind of monster—almost a kind
of government within the Iranian government

Similar anti-British (EC46a) and anti-company (EC46b) sentiments were expressed in Iraq where it
was widely believed that "the offices of Iraq Petroleum and the offices of the British
consulate were one and the same

These frictions over national pride have always been a source of difference between
foreign investors and host governments, but the nationalism which followed the war
exacerbated them

There was also resentment that the U.S. and U.K. governments received more
in taxes from Mideast oil than did Mideast governments (EC46c)

The initial dispute concerned, as usual, money. Limitations on dividend payments
by British companies were imposed by the British government in 1947 to fight inflation (EC47)

This limited payments to the Persian government based on dividends which had amounted to
about one-quarter as much as the tonnage royalty

A supplemental agreement was reached in July 1949 (EC49) and submitted to the
Iranian
parliament for approval." [Greene.STRATEGIES]

<>1950de30: Aramco signed a 50-50 profit sharing agreement
with the SaAn government (EC50), replacing the tonnage royalty

Coupled with the txx credit on foreign income given by the U.S. government in 1951 (EC51), which
in effect indirectly subsidized the SaA government, it was clear that the Americans were offering
better deals than the British

AIOC, the leading pmper in the Mideast, was slow to react, as the entrenched often are

No doubt AIOC had hoped to lead a united front of resistance to its spread
to the Mideast

Acceptance of 50-50 by Aramco's American partners pulled the rug from under AIOC
leadership, British influence in the Mideast, and the supplemental agreement

It lingers bitterly in British memories [No word in Greene.STRATEGIES about the possibility of bitter Iranian memories]

Management was at fault (PLI3). The narrow-mindedness of William Fraser (PV06), AlOC's
chairman, was criticized

But his predecessor, John Cadman, had been praised for his breadth of view
(PV05)

Fraser, wrote one critic in the British Foreign Office, "does not think politics concern
him at all. He appears to have all the contempt of a Glasgow accountant (which he was) for
any thing which cannot be shown on a balance sheet"

Neither did the two British government directors exercise their authority on strategic issues

These posts had become sinecures for retired civil servants, being occupied in 1951 by a
field marshal and a former head of the post office [Greene.STRATEGIES]

Mossadegh was "a fanatic" riding a wave of anti-British (EC46a) and
anticompany (EC46b) feeling. The company had offered to change the
supplemental agreement along the lines of the 50-50 agreements but to
Mossadegh nationalization was the only solution. The supplemental agreement
was never considered. [AI.crp.nrg=] "What the Anglo-Iranian Company did was
sheer looting, not business," cried Mossadegh, who had never set foot in the
oil fields in his life. Facts refute the charge. In addition to its
commercial activities, which employed 70,000 Persians at £20 million a year
and pmped £16 million for the Persian government in 1951, the company had
built 30 schools, a technical college, three hospitals, 35 dispensaries and
nearly alt the public health services in southwest Persia, 1250 miles of
roads, 40 bridges and from 1945 to 1950 alone £28 million in housing. It was
probably more than the government had done for the area and it showed a
clear commitment to social as well as commercial responsibilities (PL06)(PL10)(SR01)(SR02). The company was justifiably proud of its accomplishments and thought
appreciation was in order. It thought of itself as more than a commercial
enterprise which nxd- and pmp- oil. It was an empire builder which brought
civilization to the natives (PL01). Neither were the financial results
unreasonable. From Mikdashi's figures on profits and payments and dividends
from annual reports, a calculation not adjusted for inflation shows that
from 1909 to 1950 of the £492.2 million in profits before taxes and
royalties. 22% went to the Iranian government, 35% to the British government
in taxes, 20% to shareholders including the British government as dividends,
and 22% was retained by the company. In 1950 of £99.8 million. 16% went to
Iran, 51% to Britain in taxes, 7% in dividends, and 26% was retained. By
relative comparison the terms Iran received were not less favorable than
other Mideast governments received. They were considerably
better than the one-eighth royalty to leaseholders customary in the United States. With the
supplemental agreement or a 50-50 agreement they would be better still. There appears to be
no factual basis for the charge of looting by the company. Quite the contrary, it was clearly
doing more for Iran than was required to conduct its business (SR01)(SR02). In terms of services
rendered for payments received, only the British government and perhaps the Iranians appeared
to be engaged in looting. The cry for nationalization could not be defused by these facts. It
was, perhaps more than anything, a reaction against British colonialism (EC06). The
company's
special relationship (R14C) became a severe handicap (H01). The colonial mentality, the national
role the company felt it had played in Persia, was a unique combination of profit and public
service (PL01)(PL06)(PL10). But it did not contemplate stirrings of independence, of relinquishing
the white man's burden. Some of the policies which expressed this philosophy (PL13)(PL14) produced
as much or more resentment as others (PL06)(PL10) did praise [Greene.STRATEGIES]

*--Engdahl.WAR sd this =

Iranian nationalist Mossadegh was made Prime Minister with a program to control and develop
Iranian
oil resources under Iranian authority. This entailed nationalization of British AI.crp.nrg
properties. Iran was immediately subjected to British and American economic embargo [Engdahl.WAR]

The National Iranian Oil Company (NIOC; NI.crp.nrg) was created to market the oil (ECSlc
??)

To the English-dominated AI.crp.nrg [AIOC], this seemed a devastating blow

Overnight it lost three-quarters of its production and refining capacity

And it lost the largest rfnery in the world at Abadan

Its unique political business identity (PL01)(PL05)(PL06)(PL10)(PL13)(PL14)(PL15)(SRI.2.R4.HI) had been ingloriously rejected

Greene.STRATEGIES = What troubled AIOC most was the sheer ingratitude of the Persians

Longrigg wrote =

the whole of this effort, the whole of a half-century of generous and enlightened treatment
of its own workers and the public was, in the final destiny of the company in Persia, not only treated as of no
account, but attacked in terms suggesting not mere neglect but the crudest exploitation

Greene.STRATEGIES:253 = Iranian nationalization was the most traumatic political event in the history of the
industry since the breakup of Std.crp.nrg in 1911 and prior to the OPEC embargo of 1973
(EC11)(EC73)

<>1951my:USA.stt.dpt announcement =
Because of nationalization, American companies wld not deal in
Iranian oil
*--Other Majors followed in an effort of the big powers and big companies to
freeze Iran out of world markets [Greene.STRATEGIES]

<>1951jy01:Iran oil exports had ceased

AIOC expanded production in KWT Iraq, and Qatar (R46)(R34B)(R49b)

AIOC built rfneries in Kent (ENG) in1952), in Aden (1954). and in Australia (1955) (R52)(R54c)(R55)

Instead he transformed it into the most important ITL nrg.p cmp w/ mpy
"equity" access to ITL rzv~

He plowed profits in ptpt construction and other expansions of cmp

Mattei's Agip was a significant factor in the "Italian Economic Miracle"

M was an operator, bought newspapers and courted (bribed) gvt ofc~

He was popular w/ITL people. Establishment disliked him

1949:Mattei claimed to have "discovered" [u&d#1] great nrg.p and nrg.g
rzv~ in the ITL Po R. valley

Didn't pan out, so launched himself and thus ITL on the wrl nrg mkt in
competition with dominant big USA cmp~

As he took this bold step, he famously named the big Anglo-American [?&
Dutch?] transnational companies
"The Seven Sisters" [7ss]

1953:Now Mattei created Ente Nazionale Idrocarburi [ENI], merged
Agip and ran it as his fiefdom. Signed very balanced bi-laterial agreements with
suppliers in AfroAsia and in USSR, granting large % of profits to suppliers.
"The West" was disturbed. NATO countries looked askance at
Mattei's "Communist" leanings

<>1953ja:WDC| Report
by the [USA] Departments of State, Defense and the Interior on petroleum. [TXT]

The Shah was restored to power but determined to assert his independence

The restoration of a British mpy of the Iranian oil industry was unacceptable [Greene.STRATEGIES]

<>1953au:Iran was the target of Operation AJAX. The objective was
to readmit British and American oil companies to Iran and re-establish their control over Iranian crude oil [Ecrn]

The plan was devised by the British secret intelligence service and USA.stt.dpt (with CIA advisors)
and including General Norman Schwartzkopf, Sr

The procedure was first to destabilize and overthrow the elected Prime Minister Mossadegh and the Iranian
constitutional parliamentary regime

Then to replace it with a reinstated monarchical rule of Shah Pahlavi who would be instructed to
readmit the "Western" oil companies

Very much in keeping with rising Cold War anti-Communist hysteria mongering in USA, Mossadegh was labeled a communist
and the whole Iranian democratic and parliamentary structure was declared a dupe of Soviet intrigue

<>1957:Enrico Mattei
settled a "revolutionary" oil development agreement with Iran
*--1957:In tight competition with Esso and Shell, M also helped finance ALG ndp
mvt vs-FRN with an eye to gaining favor with future ndp possessors of ALG rzv~
*--These bold moves angered the world’s major petroleum companies, those whom
Mattei dubbed "The Seven Sisters" | G/7ss
*--The US domestic economy underwent the first severe recession since the end of WW2 [Ecrn]

<>1958:BP acquired AK Prudhoe Bay leases (R58f)
which contained over half the rzv~ of the North Slope discovery in 1968 (R68)
[u&d#1]
*--Purchases were made through BP North America (in Canada) when David Steel headed it [Greene.STRATEGIES]

<>1958: General Charles DeGaulle
became President of France, and among first acts in office was a call for a
historic meeting with German Chancellor Adenauer [Ecrn]

<>1960:1970; A decade of
Mideast nrg.p production glut
*--Golden age of the automobile and cheap energy
*--Rise of petrochemicals [Greene.STRATEGIES]
*1960se10:se14; IRQ Baghdad|OPEC formed up [Organization of
the Petroleum Exporting Countries] in response to declining prices for
Mideast oil. The original members—SaA, Iran, Iraq, KWT, and Venezuela—resolved
that they could "no longer remain indifferent to the attitude heretofore adopted
by the oil companies in effecting price modifications." Over the next ten years
OPEC was able to establish a revenue floor for Mideast oil that rose from $0.80 a barrel at the
beginning of the 1960s to slightly below $1.00 a barrel at the end of the
decade. [Kaufman.OIL cites *1975:WDC|SNT.MO=88-89]

<>1960oc:Mattei, for ENI, signed a historic oil-for-technology
exchange agreement with the USSR
*--M also negotiated with The People's Republic of China on similar agreements
*--Anglo-American oil companies strongly opposed M's independent entrepreneurial moves [Ecrn]
*--Mattei publicly announced that the USA mpy was over
[CF=60se10]

<>1961de15:IRQ passed Pubic
Law 80 [>lwx80], "a turning point for Western oil companies" throughout the
Mideast" [15]
*--Not full nationalization of all oil enterprise, but did lay claim to all IRQ
nrg.p.ggr
*--"The Seven Sisters" punished IRQ by freezing them out of expanding oil bzn
[Muttitt.FUEL:15-17]

<>1962:Shell.crp.nrg chm (1956-65) London,John nrv by
Sampson.SEVEN=236
*--L = "Jonkheer" and British knight
*--"I don’t know why, but oil always seems to have a smell to it…. [T]he dogs may
bark, but the caravan moves on."

<>1962fe02:LIFE MAGAZINE ad
extoled the heating power of Humble Oil and Refining Company products =
"EACH DAY HUMBLE SUPPLIES ENOUGH ENERGY TO MELT 7 MILLION TONS OF GLACIER!"
[View the ad]
TXT = This giant glacier has remained unmelted for centuries. Yet, the petroleum energy
Humble supplies — if converted into heat — could melt it at the rate of 80 tons
each second! To meet the nation's growing needs for energy, Humble has applied
science to nature's resources to become America's Leading Energy Company. Working
wonders with oil through research, Humble provides energy in many forms — to help
heat our homes, power our transportation, and to furnish industry with a great
variety of versatile chemicals. Stop at a Humble station for new Enco Extra
gasoline, and see why the "Happy Motoring" Sign is the World's First Choice!

<>1962oc27:Enrico Mattei died in plane crash
*--Mattei was scheduled only a few days later to fly to Washington for meeting
with USA President John Kennedy
*--Kennedy was urging American oil companies to reach a detente with Mattei on global oil policy [Ecrn]
*--Later investigations of the crash that killed Mattei revealed that an explosion
brought the plane down

<>1967je:French President DeGaulle announced French withdrawal
from "gold pool" arrangement [fnc] formed to support over-valued Sterling and Dollar parities [Ecrn]

<>1967no:English Pound Sterling suffered a massive run
[fnc], causing
a crisis in the Anglo-American Bretton Woods monetary system [W-ID]
and forcing devaluation of the Pound Sterling, the first such devaluation since 1949 [Ecrn]

<>1968:IRQ B.pty again in
power via coup

<>1968:1972; SSR AZR trader Oztemel,Ara hired then after 4y,
fired Giffen,James, but not before "Jim" Giffen made a substantial contribution to the petroleum
industry in the Cold War era of detente [LeVine.GLORY: ch#5:54-67]

<>1968ap:Stockholm meeting of the Group of Ten
[fnc]| France rejected
the American proposal for "paper gold" currency scheme [Ecrn]
[W-ID]

<>1968my:USA and British intelligence
launched [!?] the French "May '68" student strikes and [fnc] promoted rumors of
French Franc instability to destabilize French government [This an amazing
Engdahl.WAR claim] [SAC]

<>1970my:AER:225-45 [fnc=]|>Wolff,Richard D., Theotonio Dos Santos
(unv of Chile), and Harry Magdoff [Wki
ID] on oligopolistic corporations and their effort to control international
markets
*--Based on USA dpt of Commerce, Survey of Current Business ((UO))
*1950:1968; foreign cpt of USA based crp~ (IE=Direct rather than portfolio investment) grew from
$12b to
$65b
Net income (minus cash outflow) =
$15b
*--Dos Santos: "...the relations of dependence to which these countries are subjected conform
to a type of international and internal structure which leads them to underdevelopment or
more precisely to a dependent structure that deepens and aggravates the fundamental
problem of their peoples" [231]

<>1970:1980s; Producing country
governments take control of production and pricing [Greene.STRATEGIES]
*1970no:IRQ| Sadam Hussein regime switched to selling oil for euros rather
than dollars [Clark.Petrodollar sd this=defining moment for contemporary
Iraq]

<>1971de:McGeorge Bundy and
Ford Foundation began major study of global energy strategies
*--Study eventually
claimed that a world energy crisis was imminent, despite the promise of nuclear
energy [nrg.x] as a substitute for oil [Ecrn]

<>1972je01:IRQ under B.pty
leadership nationalized Q.crp.nrg

<>1972je:Canadian oilman and
financier Maurice Strong [Wki
ID] was chosen [ecx=] to head the Stockholm UN Conference on
the Environment which funneled millions of dollars into creation of a new
anti-industry and anti-nuclear "green movement" [Ecrn]
*1972je: USA.SNT hearings on nrg.crp~ owning ptpt
[E-TXT]

<>1973+:After the OPEC Crisis hit (EC73) Shell reassessed the
profitability of a number of countries in which it marketed and, in a repeat of the 1930s, exited [Greene.STRATEGIES:224/228] from 20 or so, including ITL and ones like VNZ in which its operations were
nationalized

As Shell's Vice-Chairman explained. "It was once part of Shell's philosophy to be seen everywhere (PL02) but no
longer."

Now it would disengage from those who cannot pay their way (PL21)

It also cut back on marginal product sectors like supplying fuel oil to utilities

<>1973my:Sweden, Saltsjoebaden |
The Bilderberg Group [Wki]
convened a secret meeting to discuss problems of "petrodollar
recycling" under projected 400% increase in world oil price [Ecrn]

<>1973je:Trilateral Commission
created by David Rockefeller and others [Official
website | Wki |
Ecrn]
*--That year Michel Crozier, Samuel Huntington and Joji Watanuki published The Crisis
of Democracy: Report on the Governability of Democracies to the Trilateral
Commission [digitized
TXT]

<>1973oc:USA Secretary
of State Kissinger intrigued [sic, Ecrn wordchoice] to trigger "Yom Kippur War" between Israel and
Arabs
*--This war precipitated the 400% oil price shock anticipated by
the Bilderberg group the spring before [G/73my] [Ecrn]

<>1974:US Government adopted Kissinger draft
of National Security Council Memorandum 200 [NSC-200]
[E-TXT]
*--NSC-200 declared as official US Government policy a plan to control rate of growth, especially of population, in the Third World
*--This was declared to be a US "national security" priority [Ecrn]

<>1975: German government
of Chancellor Helmut Schmidt won parliamentary approval for a major nuclear energy
program, similar in scope to that of France, as a response to increases in oil import costs
*--Spain and Italy also announced a major nuclear power commitment in wake of oil shock
*--In NYC that same year, CFR began its "Project on the 1980s" which called for
a "controlled dis-integration of world economy", and other measures [Ecrn]
*--The"Project" published many studies, including Øystein Noreng's _Oil Politics in
the 1980s: Patterns of International Cooperation, which was reviewed in the major journal of
CFR, Foreign Affairs[ID]

<>1975ap:Lyndon LaRouche,
Jr., proposed a global International Development Bank (1) to channel long-term credit to
"Great Projects" in key sectors of developing regions, and (2) to revitalize world industrial development [Ecrn]

<>1976au:Sri Lanka, Colombo | Non-Aligned Summit meeting adopted a proposal calling for
further economic development and for a moratorium on the interest burden borne by Third World economies hit by oil shock depression [Ecrn]

<>1977ja:Mitsubishi Research Institute of Japan proposed a
Global Infrastructure Fund to finance large infra-structure projects in key areas in the developing sector to
revive industrial investment [Ecrn]

<>1977jy:German banker Juergen Ponto was assassinated
*--Soon after, the head of the German Industrial Association, Hans-Martin
Schleyer was kidnapped & murdered [Ecrn]

<>1978:Exxon[ID] researchers submitted letter to
management which described the logic for investing in research on global warming
\\
*2015se16:NYT|>Revkin,Andrew C| "A Deep Dive into What Exxon Knew About Global Warming and When (1978) it Knew It"
[E-TXT
with extensive reader commentary, a significant expression of public political factions on contemporary ecx
questions, with links to many significant websites]

<>1978se:German Federal
Republic Chancellor Helmut Schmidt and French President Giscard D'Estaing initiated Phase One of the European Monetary
System to stabilize European currencies in wake of growing dollar instability [Ecrn]

<>1979my:English conservative government was formed by Prime Minister Margaret Thatcher
*--Within weeks she imposed drastic monetary "shock therapy" to "squeeze inflation out" of the British economy
*--Unemployment doubled over the next few months [Ecrn]

<>1979my15:Executive
Intelligence Review#6,19, a publication by the eccentric and sometimes
laughably intemperate group of macro-analysts led by Lyndon LaRouche, Jr.
*--EIR published a headlong but detailed and nearly unique exposé of the CFR's "Project on the 1980s"
[E-TXT]
*--As
politics in the global 1980s unfolded, we can see some parallel with pop-arts in that
era = Heavy Metal, indeed
[ID]

<>1979jy16:IRQ ruled now by
prx Saddam Hussein [>HsnSdm]
*--Muttitt.FUEL:vi gph of 1960:2010; IRQ share of wrl nrg.p production shows what HsnSdm
and his 3 wrx~ accomplished for IRQ oil enterprise

<>1979oc:Paul Volcker implemented Thatcher's British "monetary shock" policy in US
*--Sent interest rates above 20% for an extended period [Ecrn]

<>1979no:US elections sent Reagan-Bw1 Republican ticket to the White House
*--Reagan was committed to "free market" policies similar to Thatcher’s [Ecrn]

<>1982oc:USA Secretary of State George Shultz in UNO speech
announced "Reagan recovery" policy
*--This policy triggered a speculative consumer and real estate boom similar to the 1920s in US
*--As a result, domestic debt ratios expanded in a dramatic manner for the next seven years
*--At this time the Reagan Administration signed the Garn-St.Germain Act which removed prior regulatory controls on US Savings and Loan banks
[CF=S&L
career of Neil Bush]
*--Thus restraints were removed on yet further speculation in real estate [Ecrn]

<>1985:1986; WDC signed secret pact with SaA to further
stimulate US consumer credit boom via dramatic lowering of oil prices. This facilitated a sharp further fall
in US interest rates which lasted some months [Ecrn]

<>1986ap:USA VP Bw1 traveled to Riyadh
to signal a halt in the lowering of oil prices
*--Lower prices had by then accomplished their task (?what task) [Ecrn]

<>1989se:USA CIA Director William Webster unveiled a new
"economic directorate" of CIA to redefine role of USA CIA in "post Cold War" era [Ecrn]

<>1989no09:Berlin Wall opened, preparing the reunification
of two Germanys, as well as opening of all Eastern Europe [Ecrn]

<>1989no29:Deutsche Bank chief Alfred Herrhausen was
assassinated days after giving a media interview on his program for reindustrializing East German economy
*--Several close advisers to Chancellor Kohl (including Herrhausen), all
involved in aspects of the pending German unification, were targeted for assassination
(?by whom) [Ecrn]

<>1989de:USA Bw1 Administration invaded Panama on pretext
of capturing Manuel Noriega on allegations of drug dealings
*--Preparations were also underway for entrapment of IRQ's HsnSdm
*--The Bw1 Administration cut off all credit to IRQ [Ecrn]

<>1990au02:IRQ invasion of KWT provided pretext for
Bw1 Administration’s Operation Desert Shield
*--This = the largest US military operation since Vietnam [Ecrn]

<>1990de:Financial World:38-40|>Kindel, Stephen|
"For Want of a Pipeline"|((ptpt nrg.p nrg.gn| Today, Amo.crp.nrg has become the largest domestic pmper of natural gas, pumping
more than 3.6 bcF of natural nrg.g a day, mainly from the Gulf of Mexico. Gas
rzv~ of 18.9 tcF are reported, more than
any other domestic pmper. The strategy of nrg.gn production seems smart given the decreasing supply of nrg.gn and an
increase in demand. The only problem is that much of the nrg.g rzv~ are located in hard to reach places often
where ptpt capacity is inadequate. Even if the ptpt were started in 1991, it could cost Amo.crp.nrg $200m in nrg.g sales))

<>1991fe:Schachner,Michael. "Amoco Studying Cover for Oil Pool
Cleanup." Business Insurance:12-14 [ecx]
*--Tests show that there may be about
16.80mGallons of various petroleum products beneath its plant in Whiting, Indiana
*--Officials feel it is likely that some of the pool has moved beyond Amo.crp.nrg's property
*--Amo.crp.nrg is planning on running groundwater tests to see if the pool poses a hazard to local residents
*--$15m will likely be spent in 1991 for onsite repairs and remediation of the petroleum pool

<>1991je:Yugoslavia, Belgrade | Visiting USA Secretary of State
James Baker pledged US support for the "Greater Serbia" faction of Milosevic, resulting in eruption of war. Under
President Bill Clinton, the USA soon joined as a member of NATO in an attack on Serbia [Ecrn]

<>1991au:Oil and Gas Investor:55-57|>Woulff, Kurt. "Winners for the '90s"
*1990s:Investment opportunities in nrg.gn will emerge bcs prices of nrg.gn have become depressed relative to other fuels
*--The best relative investment performance could accrue to buyers of undervalued nrg.gn
*--Natural nrg.g is becoming a growth fuel and growth industry
*--Promising companies include Amo.crp.nrg
*--Amoco, the largest holder of natural nrg.g rzv~ in North America, has 42% of its value in that commodity

<>1991oc14: Forbes:44-54|Fuhrman,Peter. "Caught Between the Republics"
*--After the 1991 failed coup [ID]
Amo.crp.nrg
won a tender from the RUS [SSR?] gvt to develop CSP.S offshore rzv~ of
2.0bB+
*--The resultant breakdown of the KPS has resulted in the gvt not treating
Amo.crp.nrg as well as Chv.crp.nrg [ID]
*--Chv.crp.nrg also had a cns from the USSR in the CSP rgn
*--Amo.crp.nrg's problem is that its rzv~ are in the Republic of AZR
*--AZR wants to split profits with Amo.crp.nrg 50/50

<>1992de:Vyakhirev,Rem I.(934::)
Gzz.crp
boss succeeded QdnV as QdnV bcm Mnr1
*--"Chain-smoking Vyakhirev, 63, appears on the surface to be a fairly typical Soviet-style bureaucrat. He boasts
of receiving the Order of Lenin. […] He often lapses into the vague language of a bureaucrat when answering questions" [G/997se22: rtl]

<>1993ja19-1993fe10: Two
reports about how the Japanese seek closer ties with Russia and its nrg rzv~ [TXT] and about the Japanese
assessment of nrg rzv~ in Siberia [TXT]

<>1993ja-fe: This entry contains
descriptions of two Japanese reports [#1 just below and
#2 | nrg.g.rzv=] about oil and natural gas reserves in eastern
Russia. The reports were prepared at the American Embassy in TKO
[WWW SOURCE HAS EVAPORATED].

*1993ja19:First report from
the American Consulate in Sapporo
It discusses tentative JPN-RUS commercial ties in the Hokkaido-Sakhalin area. ((JPN HKD
SXL))

SUBJECT: IMI: HOKKAIDO GOVERNOR SEEKS EXPANDED TIES WITH SXL

1. SUMMARY: HOKKAIDO GOVERNOR
YOKOMICHI SEEKS TO OPEN A REPRESENTATIVE OFFICE IN YUZHNO-SXLSK AS PART OF
EXPANDED TIES WITH SXL STATE. BOTH
THE MOFA AND THE PREFECTURAL ASSEMBLY HAVE EXPRESSED OPPOSITION.
YOKOMICHI WILL VISIT THE DISPUTED NORTHERN TERRITORY ISLANDS THIS SUMMER.
HE SEES THE ECONOMIC HEALTH OF DEPRESSED HOKKAIDO PORTS AS DEPENDING ON
INCREASED RUSSIAN TIES. END SUMMARY.

HOKKAIDO
REPRESENTATIVE OFFICE

2. DRAWING ON
A CLOSE WORKING RELATIONSHIP WITH SXL STATE GOVERNOR FEDEROV, YOKOMICHI WISHES
TO OPEN A HOKKAIDO OFFICE TO SURVEY LOCAL CONDITIONS AND FOSTER 'BILATERAL'
CULTURAL AND BUSINESS TIES. BASED
ON A CAMPAIGN PROMISE TWO YEARS AGO, YOKOMICHI PLANNED TO FUND DIRECTLY A
HOKKAIDO REPRESENTATIVE OFFICE, DISPATCHING PREFECTURAL OFFICIALS TO STAFF IT.
HOWEVER HE HAS MET OPPOSITION BY BOTH THE MOFA AND THE HOKKAIDO ASSEMBLY
IN LATE DECEMBER THE ASSEMBLY LED BY THE LDP PASSED A RESOLUTION INDEFINITELY
POSTPONING OPENING A SXL OFFICE.
THE RESOLUTION CITED "UNSTABLE POLITICAL CONDITIONS" AND "WIDESPREAD ECONOMIC
MISMANAGEMENT" IN RUSSIA, ASSERTING THAT "HOKKAIDO BUSINESS CIRCLES WERE
SKEPTICAL ABOUT THE USE OF ECONOMIC TIES WITH SXL."

3. HOWEVER,
YOKOMICHI IS PRESSING FOR A BUDGET FOR THE PROJECT IN THIS FISCAL YEAR'S BUDGET,
BEGINNING IN MARCH. HE SEEKS
350,000 DOLLARS "TO STUDY" OPENING AN OFFICE, URGING THAT HOKKAIDO NEEDS AN
OFFICE TO GATHER INFORMATION AND PROVIDE GUIDANCE PRECISELY BECAUSE SXL IS
UNDERGOING RAPID CHANGES. IT IS EXPECTED THAT HE WILL USE PART OF THE PROPOSED
BUDGET DISPATCH A PREFECTURAL TEAM ON A TEMPORARY BASIS THIS YEAR TO REPORT ON
SXL DEVELOPMENTS.

MOFA OBJECTIONS

4. MOFA HAS
ALSO OBJECTED TO AN HOKKAIDO OFFICE IN SXL, CONCERNED OVER THE LEGAL
COMPLICATIONS RAISED BY SUCH AN OFFICIAL PRESENCE.
ACCORDING TO PREFECTURAL SOURCES, THE MOFA INFORMED HOKKAIDO THAT
LOCATING AN OFFICIAL REPRESENTATIVE OFFICE IN SXL WOULD BE UNACCEPTABLE BECAUSE
POST-WAR QUESTIONS OF JAPANESE SOVEREIGNTY IN THE REGION HAVE BEEN LEFT
UNSETTLED BY THE ABSENCE OF A POST-WWII JAPAN-RUSSIAN PEACE TREATY.
AS THE MOFA CONTACT EXPLAINED IT TO HOKKAIDO OFFICIALS, OPENING SUCH AN
OFFICE COULD BE A TACIT RECOGNITION OF RUSSIA'S OCCUPATION OF SOUTH SXL.
(COMMENT: SOUTHERN SXL BELOW THE 50TH PARALLEL WAS JAPANESE TERRITORY
DATING FROM THE 1905 PORTSMOUTH TREATY, ENDING THE RUSSO-JAPAN WAR.
END COMMENT)

5. TO MEET
MOFA CONCERNS, THE PREFECTURE PUT FORWARD PROPOSALS TO HAVE THE OFFICE REPRESENT
A "NON-PROFIT FOUNDATION" RATHER THAN THE PREFECTURE.
PLANNERS PROPOSED THE OFFICE BE NAMED "HOKKAIDO ECONOMIC INFORMATION
LIAISON OFFICE," FUNDED BY PRIVATE SOURCES AND HOUSED IN RENTED QUARTERS.
THE STAFF, HOWEVER, CONTINUE TO BE PREFECTURAL PROFESSIONALS. THIS
PROPOSED OFFICE HAS ALSO MET A LUKEWARM RECEPTION.
THE PREFECTURAL ASSEMBLY THIS PROPOSAL WAS PREMATURE, GIVEN RUSSIA'S
ECONOMIC CONDITIONS. HOKKAIDO'S NORTHERN TERRITORIES' ASSOCIATION ALSO
CRITICIZED IT AS OBSCURING THE SOVEREIGNTY QUESTION.

INVESTMENT IN "NORTHERN TERRITORIES"?

6. MOFA RAISES SIMILAR CONCERNS OVER THE SOVEREIGNTY ISSUE, THE QUESTION OF EVEN INVESTMENT BY
JAPANESE FIRMS IN THE NORTHERN TERRITORIES, THE DISPUTED ISLANDS OFF HOKKAIDO'S
EASTERN COAST NEAR NEMURO. HOWEVER, GOVERNOR YOKOMICHI ANNOUNCED IN NEW YEAR'S
INTERVIEWS IN LOCAL MEDIA THAT A LEGAL MEANS CAN BE FOUND FOR OPENING JAPANESE
INVESTMENT ON THESE DISPUTED ISLANDS. TO EXPAND ECONOMIC TIES, HE SAID HE WISHES
TO OPEN A DIRECT DIALOGUE WITH THE RUSSIANS ON THE ISLANDS.
HE ANNOUNCED THAT HE WILL VISIT THE ISLANDS IN JULY 1993 AS PART OF THE
'VISA FREE' EXCHANGES. HE PROPOSED
THAT HOKKAIDO AND OTHER JAPANESE FIRMS INVEST IN FISH PROCESSING PLANTS ON
KUNASHIRO OR ETORUFU, THE LARGEST ISLANDS.
YOKOMICHI SAID THAT THE 1992 "VISA FREE" EXCHANGES WITH RUSSIANS ON THE
ISLANDS HAD LAID THE BASIS FOR GROWING DEMANDS IN HOKKAIDO FOR ECONOMIC TIES
WITH THE ISLANDS.

7. YOKOMICHI
SAID THAT SUCH INVESTMENT ON THE ISLANDS WOULD CONTRAVENE THE GOVERNMENT OF
JAPAN (GOJ) STANCE ON JAPANESE SOVEREIGNTY OVER THE ISLANDS.
IN EFFECT, HE PROPOSED WORKING OUT WITH SXL AUTHORITIES AN ARRANGEMENT
FOR THE ISLANDS BECOMING A SINGLE LARGE 'FREE PORT' ZONE FOR JAPAN. THE PLANT'S
PRODUCT WOULD ENTER JAPAN AS 'MADE IN JAPAN' WITHOUT CUSTOMS DUTIES.
IN ADDITION, THE PLANT'S RUSSIAN EMPLOYEES WOULD BE PAID IN YEN. THE
CONTRACT WITH THE SXL AUTHORITIES FOR LOCATING THE WOULD ARRANGE TO AVOID THE
NEED FOR LICENSES, LAND TAXES OR ARRANGEMENTS THAT MIGHT IMPLICITLY RECOGNIZE
RUSSIAN SOVEREIGNTY. (COMMENT: IN
EFFECT, YOKOMICHI APPARENTLY SEEKS TO TURN TO HOKKAIDO'S ADVANTAGE A 12/8
DECLARATION BY RUSSIAN PRESIDENT YELTSIN MAKING THE "SOUTHERN KURILES" A FREE
ECONOMIC ZONE IN WHICH OVERSEAS FIRMS WOULD OBTAIN TAX EXEMPTIONS, FOREIGN
CURRENCY USE, 99 YEAR LEASES AND OTHER PRIVILEGES. SXL GOVERNOR FEDEROV PROMOTED
THIS SPECIAL STATUS FOR THE ISLANDS TO REVIVE THEIR ECONOMIES. END COMMENT.)

"VISA FREE"
VISITS TO NORTHERN TERRITORIES

8. YOKOMICHI
DEMONSTRATED HIS PERSONAL INVOLVEMENT IN THE ISSUE BY ANNOUNCING AT NEW YEARS
THAT HE WILL VISIT THE NORTHERN TERRITORIES ISLANDS AS PART OF A "VISA FREE"
EXCHANGE GROUP SUMMER. HE SAID HE
HAS THE MOFA APPROVAL FOR SUCH PARTICIPATION. HE ANNOUNCED THAT HOKKAIDO WILL
NOT RESERVE ITS OFFICIAL ROLE TO THE EXCHANGES ONLY TO PREPARING FACILITIES FOR
RUSSIAN VISIT. (COMMENT: THIS IS A POLICY DEVELOPMENT SINCE MOFA HAS SOUGHT TO
RESTRICT PARTICIPATION IN THE VISIT GROUPS TO MEMBERSHIP BY FORMER RESIDENTS.
IT HAS RESISTED HOKKAIDO'S EFFORTS TO INCLUDE SPORTS AND BUSINESS GROUPS
TO BROADEN THE EXCHANGES. END COMMENT.) YOKOMICHI INDICATED THAT THE SUCCESS OF
THE EXCHANGES IN 1992 FED A DEMAND IN HOKKAIDO COMMUNITIES FOR MORE NUMEROUS,
BROADER PARTICIPATION. CURRENT MOFA
POLICY IS THAT THE VISITS' PARTICPANTS WILL REMAIN AT THE SAME NUMBER AS LAST
YEAR'S.

9. COMMENT:
YOKOMICHI'S PROPOSALS FOR A SXL OFFICE AND NORTHERN TERRITORIES ECONOMIC
COOPERATION LACK PRECISION. IN
FACT, IT IS UNCLEAR THAT JAPANESE INVESTORS COULD SO NEATLY NAVIGATE THE STICKY
NORTHERN TERRITORIES SOVEREIGNTY QUESTIONS THAT CONCERN MOFA AS HE SEEMS TO
SUGGEST. HOWEVER, YOKOMICHI SEES
THESE RUSSIAN TIES AS THE KEY TO REVIVING DEPRESSED FISHING ECONOMIES IN CITIES
SUCH AS OTARU, NEMURO AND WAKKANAI. YOKOMICHI LIKES TO CITE HOW PROSPECTS APPEAR
QUITE DIFFERENT IN WAKKANAI FROM THOSE IN TKO BECAUSE HOKKAIDANS THERE LIVE
ABOUT 50 KM AWAY FROM SXL ACROSS THE LA PEROUSE STRAIT. THESE RESIDENTS AT
HOKKAIDO'S NORTHERN TIP SEE EVIDENCE IN THEIR POCKETBOOKS OF THE ADVANTAGES OF
EXPANDING RUSSIAN TRADE AS THE NUMBER OF RUSSIAN SHIPS AND FISHING BOATS
VISITING WAKKANAI HAS INCREASED DRAMATICALLY (FROM 376 IN 1991 TO OVER 800 LAST
YEAR). IN THE SUMMER, THERE IS EVEN AN UNOFFICIAL FERRY SERVICE FOR THOSE DOING
BUSINESS ACROSS THE STRAITS IN YUZHNO-SXLS. GOVERNOR YOKOMICHI CAN BE EXPECTED
TO CONTINUE LAUNCHING TRIAL BALLOONS IN THE PRESS ON WAYS TO SHAKE LOOSE FROM
THE DEADLOCKED JAPAN-RUSSIAN VIEWS ON THE NORTHERN TERRITORIES.
AS A LOCAL LEADER INDICATED, GOVERNOR YOKOMICHI DISAGREES WITH THE GOJ
LINKAGE OF ECONOMIC AID TO PRIOR RUSSIAN RESOLUTION OF THE SOVEREIGNTY QUESTION.
HE REPORTEDLY SEEKS A STEP-BY-STEP APPROACH OF TRADE AND AID TO MOVE
RUSSIAN PUBLIC OPINION TO EVENTUALLY ACCEPTING THE GOJ POSITION.

SUBJECT: JAPANESE ESTIMATES OF ENERGY RESOURCES IN EAST
SIBERIA AND RUSSIAN FAR EAST ((SBR))

1. AN INTERIM
REPORT PREPARED BY THE SAPPORO BASED NORTHERN REGIONS CENTER (NRC), A MOFA
SUPPORTED RESEARCH CENTER, ESTIMATES THAT ENERGY RESOURCES IN EAST SBRIA AND THE
RUSSIAN FAR EAST TOTAL 17.8 bT.nrg.p AND 56.0tcM.nrg.g. [p.rzv=]
PROVEN RESERVES TOTAL 640 mT.nrg.p AND 2.50tcM.nrg.g, 3.6% AND 4.5%
RESPECTIVELY OF TOTAL ESTIMATED RESERVES.
THE NRC ESTIMATES ARE BASED ON DATA PROVIDED BY THE GEOLOGICAL COMMITTEE
OF THE RUSSIAN FEDERATION.

2. 51% OF PROVEN OIL RESERVES ARE LOCATED IN THE RUSSIAN FAR EAST AND 49% IN EAST SBR.
ESTIMATED OIL RESERVES ARE DIVIDED EQUALLY BETWEEN THE TWO REGIONS.
63% OF PROVEN GAS RESERVES ARE LOCATED IN THE RUSSIAN FAR EAST, BUT ONLY
43% OF ESTIMATED GAS RESERVES. THE
BALANCE IS LOCATED IN EASTERN SBR.
PETROLEUM BEARING REGIONS IN EAST SBR INCLUDE KRASNOYARSK AND IRKUTSK WHILE
THOSE IN THE RUSSIAN FAR EAST INCLUDE AMUR, KMQ, XBR, MAGADAN, PRIMORYE, SAKHA
AND SXLIN.

3. THE
REPORT'S FINDINGS WERE RELEASED BY MOFA DIRECTOR-GENERAL KAZUO OGURA ON FEBRUARY
2 IN AN ADDRESS TO THE SEVENTH SYMPOSIUM ON PACIFIC ENERGY COOPERATION (SPEC 7)
WHICH DEVOTED ONE OF ITS FOUR HALF DAY SESSIONS TO PROSPECTS FOR ENERGY
COOPERATION IN RUSSIA. OGURA AND
OTHER SPEC 7 SPEAKERS NOTED THAT THE DEVELOPMENT OF RUSSIA'S ENERGY SECTOR
OFFERED SIGNIFICANT OPPORTUNITIES FOR INTERNATIONAL COOPERATION.
BEST PROSPECTS FOR SHORT TERM ENERGY COOPERATION IN RUSSIA WERE IN
PROJECTS TO REVITALIZE EXISTING nrg.g & nrg.p.ggr. IMPLEMENTATION OF LARGE
GREENFIELD ENERGY PROJECTS IS UNLIKELY UNTIL RUSSIA ESTABLISHES THE NECESSARY
TAX AND LEGAL SYSTEM TO FACILITATE THE LARGE INVESTMENTS NEEDED FOR
INFRASTRUCTURE AND TRAINING.
SPEAKERS ALSO STRESSED THAT RUSSIA'S ABILITY TO SERVE AS A RELIABLE SOURCE OF
nrg xpt~ WOULD ALSO DEPEND HEAVILY ON ITS ABILITY TO REDUCE CURRENT ENERGY
WASTE.

4. MOFA
SOURCES EXPRESSED HOPE THAT THE NRC STUDY WOULD LEAD TO FOLLOW-UP FEASIBILITY
STUDIES FOR SPECIFIC PROJECTS. A
MORE DETAILED STUDY OF RUSSIA'S ENERGY RESOURCES IS BEING CONDUCTED BY JAPAN'S
INSTITUTE OF ENERGY ECONOMICS AND IS INTENDED TO PRODUCE MORE SPECIFIC
INFORMATION ON BOTH PETROLEUM AND NRG.C RESOURCES THROUGHOUT RUSSIA.
INTERIM RESULTS OF THE IEE STUDY WILL BE READY IN APRIL 1993 WITH A FINAL
REPORT EXPECTED IN MARCH 1995.
RESULTS OF THE STUDY WILL BE AVAILABLE ONLY TO IEE MEMBER ORGANIZATIONS WHO
PROVIDED FINANCING FOR THE PROJECT.
[?GO 93ap & 95mr

5. (4 in original). COPIES OF THE NRC REPORT AS WELL AS OTHER PAPERS REGARDING
PETROLEUM DEVELOPMENTS IN RUSSIA PRESENTED AT THE SYMPOSIUM ARE BEING POUCHED TO
EB/ERF/OGE AS WELL AS AMERICAN EMBASSY MOSCOW.)

<>1993se10:FoA:81-93|Stanislaw,Joseph and YrgD| "Oil: Reopening the Door" [to
Russia]
After the fall of Communism, Russian oil production fell precipitously, from
12.5mB/d (1988) to
07.0mB/d (1993)
This drop is due to Soviet "over investment in terms of return, poor oil field
practices, and outdated technology." Unfortunately for Russia, oil is one of
the few things it can sell for hard currency, of which it is in desperate
need. It has been estimated that Russia needs to spend
$50b between now and 2000 in order to stabilize oil production at present levels.
In order to return to
12.5mB/d, Russia will have to invest another
$50-70b
Clearly, this money will have to come from joint ventures with foreign,
probably Western, companies. Russia, however, will have to compete with the former Soviet
Republics, Africa, Latin America, and Southeast Asia for oil investments

<>1993de:KZXan and a consortium of Western
[sic! zpd] oil companies (including Mobil, British Gas, Agip, Total, BP.crp.nrg,
Statoil and Shell.crp.nrg) had signed an agreement to explore and develop potentially
massive oil and nrg.g.rzv~ underneath the CSP.S
[http:\\www.eia.doe.gov/emeu/cabs/kazak.html]

--------------------

<>1994fe27:MGW:15 translated Le Monde| Michele Maringues reports on NGR
developments from Port Harcourt =
The Ogoni people are stepping up their campaign for a larger share of their country's revenues.

ONLY EIGHT months ago [summer of 1993] the market place in Kaa, some 60 kilometres south of Port Harcourt, was a bustling [sic] with traders. Today all that remains is a desolate ruin where a piece of torn galavanised sheeting occasionally hums in the wind — a terrible testimony to the tensions undermining a region vital for Nigeria's oil production.

For more than a year, the Nigerian army has been on a state of full alert in the 650 square kilometres of Ogoni country where the Ogoni population barely amounts to 500,000. Nigeria's oil is carried through this luxuriant country in pipelines to the Bonny terminal.

There are road checkpoints, and soldiers both to protect the oil technicians and prevent another outbreak of ethnic violence between the Ogonis and the neighbouring Andonis.

I.ast July, following incidents at the height of the presidential election campaign, the Andonis massacred Ogoni fishermen returning from Cameroon, then launched an all-out attack on Kaa, blowing up places of worship, homes and schools. The fighting continued until September, leaving 438 Ogonis and 123 Andonis dead.

The two communities had been living in peace for the last 40 years. Who provided the Andonis with the explosives and the automatic weapons used so devastatingly in the Kaa attack?

[…]

"It's Shell's filthy war," say the Ogonis, accusing, without any proof, the powerful Anglo-Dutch company of fomenting inter-ethnic strife with the help of the former Rivers State governor, Rufus Ada-George, an Okrika.

In fact, the Ogonis are upsetting many people. For the last two years, this humble and obscure community, one of the most backward living in the Niger delta, has been spearheading a campaign in favour of environmental rights in the Third World and the defence of oppressed minorities. Behind them there are not only the other ethnic minorities of the southeast who form the bulk of Nigeria's population, but also all those who challenge the supremacy of the three dominant groups — the Hausa-Fulani in the north, the Yoruba in the west and the Ibo in the south — and demand a fairer share of the country's wealth.

Many Nigerians cannot accept the fact that the government is spending billions on constructing the federal capital Abuja, with its expressways, conference centres and a presidential palace, while their villages still lack proper roads, schools, running water and electricity.

"The Nigerians don’t work, they don’t collect taxes, all they do is sit around waiting for the oil money to see how much of it the ‘Thief of Abuja’ (the Nigerian head of state) is going to leave them," quipped Ken Saro-Wiwa, 52. founder of the Movement for the Survival of the Ogoni People (Mosop)

[Nigerian Oil]

Before the Biafra succession in 1967, when the Ibos took the initiative, over 90 per cent of the oil produced in the southeast of the country came from non-Ibo territories, he pointed out. In 1970, the oil-producing Nigerian states were still receiving 45 per cent of the oil revenues.

Then, under General Ibrahim Babangida's regime (1985-93) their share fell to 1.5 per cent, then doubled last year when public protests became too great. "They leave us 3 per cent of the oil and 100 per cent of the pollution," said Saro-Wiwa.

In the autumn of 1992, Mosop gave the oil firms an "ultimatum". It demanded £18 billion in owed dues from Shell and Chevron and their Nigerian partner, the Nigerian National Petroleum Company (NNPC), plus £4 billion compensation for the environmental damage inflicted over the last 30 years. On January 4, 1993, when all public protests were banned, between 150,000 and 200,000 took part in a peaceful march through Ogoni country.

A few weeks later, with an army clamp-down on the region, Mosop again succeeded in organising a "civic vigil" with the traditional religious chiefs. After several bloody incidents, Shell was forced to close down all its Ogoni oil wells. In May, the federal government issued a decree laying down the death penalty for anyone who threatened Nigeria's unity.

WHEN the military regained power last November [1993], it forced Governor Ada-George to resign and this opened new prospects. Sweeping aside the hesitations of the "northerners", the new head of state, General Sani Abacha, promised to hold a constitutional conference in March for re-establishing Nigeria on more equitable bases.

In January. General Abacha sent Donald Etiebe and Alex Ibru, his oil and home ministers respectively (both members of delta minorities), to Rivers State as a sign of good will and similar visits are planned to the other oil-producing states.

Everybody now feels that it is time to get around the table, starting with the constitutional conference promised for March.

<>1994au24:WSJ:1|Newman,Barry. "Dire Strait: Oil, Water and Politics Make a
Volatile Mix in Crowded Bosporus"

TRKey has
recently enacted new regulations making it more difficult for oil tankers to
pass [tpt] through the Bosporus, the strait between the Black Sea and the
Mediterranean. Russia is very displeased about this development, as it narrows a
route for nrg.p xpt~. TRK claims that increased traffic in the straits will
cause environmental damage, and it is necessary to act now. If things continue
on the same course, says Turkey, there will inevitably be a huge spill in the
straits. However, this conflict has not prevented Turkey from accepting a large
shipment of Russian weapons to settle an old debt between TRKey and the former
USSR, whose debts Russia inherited. Finally, a rivalry is brewing between Russia
and Turkey over the route of a ptpt from AZRjan.

<>1994oc26:CDP:3-4|Yusin,Maksim. "The Last Submarine Will Cast Off for IRN"

IRN is a major market for Russian weapons makers, and Russia has been selling large
amounts of conventional weapons to IRN despite strong
USA objections. Russia is unlikely to stop shipping weapons,
considering that they are a major source of hard currency (IRN already owes
Russia over $300m for arms deliveries). President Yeltsin has promised to
halt arms deliveries, but they still continue. Russia is a major supplier of
IRNian diesel submarines, which are considered a grave threat to established
navies and regional security (and, of course, they can prey on oil tankers
in the event of war). RUS has also signed a treaty with IRN, along with
AZRan, TKMia, and KZXan which promises to increase regional cooperation in
oil production in the CSP.S. Finally, IRN wants to have influence over nrg.p
xpt~ from the former Soviet Republics in Central Asia, against Russia's
strong resistance.

<>1994se:AZR
CSP.S|In what was described as "the deal of the century", an international
consortium - the Azerbaijan International Operating Company (AZR.IOC) - signed an
$8.0b, 30y contract to develop 3 nrg.p.ggr =

Recent events have blocked progress in the $7b development of nrg.p.ggr underneath the CSP.S,
which is believed to be very nrg.p-rich. The Russians claim that
their recently-acquired 10% share in the consortium developing the CSP.S is
not enough for them to allow development; Moscow is claiming a territorial
right to the oil underneath the CSP.S, and says that it supports development
only if all partners recognize her claim to the CSP.S nrg.p.ggr|The
consortium's other mmb~ =
Uno.crp.nrg,
Pennzoil,
Amo.crp.nrg,
BP.crp.nrg ID, and
the national AZRjani firm

[why doesnt' UPI list others?]

President Clinton asked President Yeltsin to expedite the deal. Clinton has
also asked Russia to expedite her negotiations with
Chv.crp.nrg [ID],
KZXan, and
OMN
about the construction of a ptpt from TGZ.nrg.p.ggr to RUS port NVR. Chv.crp.nrg, which is paying for most of the costs of building the ptpt, claims that it
is getting a disproportionately smaller share than it deserves. Russia,
however, is reluctant to renegotiate the current deal out of fear that her
revenues will be reduced under any new arrangement.

Russia claims that despite its apparently conciliatory policy towards IRQ, "her efforts
to help IRQ will help KWT." The Russians recently announced that she had reached
an agreement with IRQ that would lead to IRQi recognition of KWT and her
borders. Russia has accused the West of not appreciating her efforts on behalf
of KWT, and there seems to be some truth in Russia's assertion. Among the Arab
countries, however, Russian actions on behalf of KWT have been met with enthusiasm, and
Russian prestige in the area has risen. Russian policy towards KWT seems to mimic that
of the USA; when President Clinton condemned IRQ for recent troop movements near the
KWTi border, President Yeltsin lost no time in issuing his own condemnation. Russia's
recent work to ease tensions between IRQ and KWT has also provided
President Yeltsin with "a voice on the Middle-Eastern Stage."

IRQ owes Russia $7 billion, but cannot pay because of international sanctions.
Russia, along with France, has been trying to lift UN sanctions against IRQ,
very much to the ire of the United States. Although American officials are
not pleased, they understand that President Yeltsin reaps needed political
benefits from such displays of diplomatic independence. Russia has also been
pressuring IRQ to recognize KWT's present borders. Talks have been underway
for closer Russian-IRQi cooperation in oil production and Russian firms'
involvement in the IRQi oil industry after sanctions are lifted. Russia has
also recently signed a $10 billion "trade, industry, and oil projects
protocol" with IRQ. These moves are seen by American officials as an attempt
by Saddam Hussein to split Russia and the West in regards to their IRQ
policies, although Russia has recently become worried that it is appearing
to be IRQ's ally. Russian efforts have been complicated by a statement from
a high official in the Foreign Ministry to the effect that "Saddam Hussein
should be respected as a political leader," and that relations with IRQ
should be improved.

<>1994oc24:Russia and Caspian Oil Deals II
-Anonymous. "Russia Seeks New CSP.S Deal," 94oc04:Lloyd's List/Reuter Textline
To relieve the stalemate in CSP.Sea oil development, Moscow has proposed that a new treaty
be worked out between
RUS
AZR
KZXan
TKMan, and
IRN

KZXan has agreed to work out a common position with Russia, and submit it to the other
three littoral states. This treaty would create a legal basis for the
development of the Caspian, and possibly create a multi-national body to oversee
Caspian oil projects. Russia also wants to address environmental concerns.
Observers are saying that this proposal could be a reminder to Russia's
neighbors that her concerns and interests in the area are not to be ignored.
Also, a rivalry is brewing between TRKey and Russia over the route of a ptpt
from AZRjan

After
establishing full diplomatic relations after the Gulf War, Russia and SaA
are becoming on better terms with each other. The two countries recently
signed a trade pact which opens the door to increased Saudi-Russian trade,
which is now composed primarily of Russian xpt~ of timber and cars to SaA.
The Russians sought to reassure the Saudis that Moscow's relations with IRQ
would not be developed at the expense of the Gulf states. A high-level
Russian delegation recently visited Riyadh to look for "deals in space
technology, heavy industry, trade, and investments." The Saudis praised
Russia's "new pragmatic approach in the Middle East," and a Riyadh newspaper
noted that "In recent years, Moscow has drawn closer to the Moslem world."
Moscow's relations with SaA are indicative of a Russia which is becoming
more involved in Middle Eastern affairs.

To
stimulate the petroleum sector of its economy, Russia has abolished its
quota system for oil xpt~, eliminated the xpt tax on oil, and greatly eased
necessary licensing procedures. Russia has also insisted that Western [zpd]
oil companies help expand the Russian ptpt network as the price of
developing her huge resources. Tex.crp.nrg has recently signed an agreement to
develop 11 nrg.p.ggr in the northern Russian region of Timan-Pechora, which
should go on-line in four years. Amo.crp.nrg has also signed on to develop the
world's [wrl] largest untapped natural nrg.g field, near Novy Port, and
plans to build a $15 billion ptpt from the Russian arctic to Europe. Health
and ecological concerns have arisen, but they have not been addressed by the
Russian government.

<>1994de10:Russian Oil Decrees|>Anonymous. "A Gusher Under Ice", 94de10:Economist:64-5. In addition to an
in-depth profile of Luk.crp.nrg, the largest Russian oil company, [prv] this article
details two of President Yeltsin's decrees which meant to stimulate the oil
sector of the economy.

First,
President Yeltsin decreed that the government must sell off state-owned oil
companies to private Russian companies in order to create about ten major
Russian integrated oil companies (Luk.crp.nrg will likely be the largest). This
will probably make the Russian oil industry more competative and efficient

Second,
YlcB decreed the abolition of oil xpt quotas, which created an artificial
xpt cap. The amount of Russian oil xpt~ will become determined by the
capacity of ptpt~. As a result of this decree, Russian oil xpt~ should
increase, domestic oil prices should rise sharply, and the income of the
oil companies should rise as well (Luk.crp.nrg expects its real cash flow to
double in 1995).

<>1995wi:KZX| Chv.crp.nrg
[ID] announced cutbacks in its $20b TGZ joint venture due to
frustration with the lack of progress in this area. Given adequate xpt outlets,
Chv believes Tengiz [TGZ] can reach peak production of

0.750mB/d
by 2010

Another
estimate, by consulting firm Wood Mackenzie, is that Kazak [sic!]oil and
condensate production could reach

1.40mB/d by 2010, but only with investment of huge amounts
($35.0b) [SOURCE]

<>1995:Russia debated the massive "privatization"
of old Soviet economic enterprises, many of national, even international, significance, most particularly
the huge petroleum and natural gas industries [TXT]

<>1995ja:KZXan & RUS signed a series of
accords which had been promoted by Presidents Yeltsin [&] Nazarbayev as the
foundations of a new "Eurasian Union". Prominent among the accords was an
agreement to establish customs-free trd between the two countries for an
unspecified period, as well as joint development of Knrg.g.ggr

<>1995mr:
CF:1993ja:je

<>1995mr:KZX
prx Nazarbayev granted most favored status to Knrg.g.ggr prj which involved
projected $10b over 40years|The giant Knrg.g.ggr, located in the northwestern
part of the country, alone contains about 46.0tcF of natural gas. In 1992,
British Gas and Agip of ITL won a tender allowing them exclusive rights to
arrange the development of Knrg.g.ggr, an extension of Russia's Orenburg field.
British Gas and Agip also have an agreement with Russia's Gzz.crp
for development
of the field and utilization of Russia's cross-border Orenburg nrg.g nrg.p.zvd [
http:\\www.eia.doe.gov/emeu/cabs/kazak.html ]

Explosion
on the nrg.g ptpt-line near Ukhta resulted in no less than 3000 tonnes of nrg.g
burnt.

Draft
information on the fire incident on the nrg.g ptpt-line near Ukhta, Komi
Republic.

On the
night of April 27, on the main nrg.g line near the town of Ukhta, a fire
incident was registered in the vicinity of a compressor unit, at a distance of
about 15-17 km from the town of Ukhta and at some 800 metres from a village. The
hole after the explosion was 5 meters deep.

The first
information about this accident was reported by a JAL pilot who witnessed it at
01:30am, MVA time. The fire was so significant that he thought it was a nuclear
explosion. As usual, official reports were conflicting. According to Gzz.crp
(Gas
Industry Association), the fire began at 02:20am and was over by 05:00

According
to a representative of the Ministry of Emergency Situations, the fire was over
by 4 a.m. He stated the situation was under control. The Ministry of Environment
had no information whatsoever.

According
to the chief engineer from the "Severgasprom" MA Ivan Gubanok [Gzz.crp
?], this
should be considered as a common accident. The similar ones occur almost every
week. According to him, the nrg.g ptpt passes through sparse forests where, as a
result of the accident, some 30-40 trees were burnt. He also said that all nrg.g
that was between compressor units, had burnt out.

According
to the Ukhta Civil Defence headquarters, the trees within the accident zone were
not affected.

Deputy
Minister of Environment Victor Kostin responsible for the control of such
situations is away on his business trip. The chief of the state ecological
inspectorate Rustem Mamin is not in his office since yesterday. The chief of the
nature protection department of the Komi republic is on holidays now, his
colleagues failed to report any information at 1 p.m.

This
incident is another example of catastrophic situation in the nrg.g and oil
network in Russian. In general, most oil and nrg.g ptpt-lines in Russia are
operated longer than can be permitted.

Over 10% of
ptpt-lines are operated more than 35 years
32%, more
than 20 years
30%, 15-20
years.

It is not
surprising that uneven increase of accident rate is observed in Russia. For
instance, in the Komineft network alone, the number of accidents increased from
51 in 1986 to 2470 in 1994.

Greenpeace
considers this accident cannot pass without leaving a harmful trail in the
environment. Acid precipitations, smoke and soot are yet to come. A considerable
amount of carbon dioxide - major greenhouse nrg.g - will be released in the
environment.

The nature
of this region is quite fragile. This is a section of northern taiga that is
rather close to tundra. Environmental impacts in this region are already
significant. An annual 780 kg of hazardous substances (including oil and gas)
per citizen are released in the environment, which is comparable with similar
releases in major industrial cities, such as Moscow and Ekaterinburg. Even a
small addition of pollutants may cause destruction of forests and fragile Arctic
biological systems.

More
detailed information about ecological effects of this accident will be known
tonight after the site investigation by Greenpeace team.

According
to the video sent from Uchta, at least 10 hectares were destroyed.

About
Helium:

Helium is
extracted from natural nrg.g deposits. Only a few sources in the world [wrl]
contain a significant proportion of helium and justify its separation. These are
in the US, Poland, Algeria and Russia. Because of its high value, helium is the
only major industrial nrg.g to be traded internationally.

Only
hydrogen nrg.g is lighter than helium but unlike hydrogen, which is highly
inflammable, helium is inert. It is therefore a natural and safe choice for
filling balloons of all shapes and sizes. Being so cold when liquefied (-272.2o
C or -457.96o F), it provides the means to achieve the very low temperatures
needed for the superconducting magnets in hospital MRI scanners and specialised
research equipment.

<>1995je28:KZXan adopted a new oil and nrg.g law which is widely recognized as a
critical step in attracting foreign ekn investment. Among other measures, the law
contains a broad provision for competitive bidding on nrg prj~. Also under the
law, the Kazak [sic!] gvt may grant exploration rights by competitive tender or
through independent, direct negotiations. Contracts may be in the form of joint
ventures, service agreements, or production-sharing arrangements [
http:\\www.eia.doe.gov/emeu/cabs/kazak.html ]

<>1995jy:CZC
Industry and Trade Minister Vladimir Dlouhy visited Russia to discuss long-term
supplies of natural gas to the Czech Republic. Also on the agenda was Russia's
$3.4 billion debt to the Czech Republic, which Russia hopes to pay off at least
partly with gas. Finally, the two countries are
negotiating participation of Czech companies in the construction of a gas ptpt
from Russia's northern Yamal peninsula to western Europe. In addition to Russia,
the Czech Republic also is conducting negotiations with NOR regarding possible
large-scale gas supplies from that country beginning in the year 2000. Increased
natural gas imports are becoming more important as nrg.c's traditional role in
the Czech energy mix declines for environmental and economic reasons.

In 1994 (as
in 1993), the Czech Republic consumed about 240bcF nrg.g - nearly all of which
was imported from Russia via the Transgas ptpt system. Transgas consists of four ptpt
sections built between 1972 and 1988, with a total annual capacity of 2.60tcF
(63% CZC, 37% Slovak). Transgas not only provides gas to the Czech Republic and
Slovakia, but also serves as a transit line to GRM FRN ITL & OST.

-----

<>1995au:JPN's Sumitomo {Smt} crp & CAN's SNC-Lavalin Group won a $480m contract
to build a large oil xpt nrg.p.zvdy in the Zhanazhol oil field near Aktubinsk.
In addition to generating $300m in annual product xpt revenues, the plant is
designed to produce 0.50mT of liquefied petroleum nrg.g and 70 bcF nrg.g for dms
power generation as early as 1997 [ http:\\www.eia.doe.gov/emeu/cabs/kazak.html
]

<>1995au:Frontier Oil Exploration Company
[css]
became the first USA company to sign an agreement for a conventional exploratory
concession in POL. Other active U.S. companies include Tex.crp.nrg, which
received a concession soon after Frontier, and Exx.crp.nrg [ID]

<>1995au22:Exxon, America's largest oil company, began toying with the idea of
going east, not west. Exxon envisions its ptpt to carry TKMistan's plentiful
natural gas east to the Pacific. The ptpt would pick up Uzbekistan's gas exports
and run to China and probably South Korea, with the possibility of a spur to
Japan.

<>1995se09:NYT|>LeVine,Steve|
"Oil Giants May Bypass Russia On Pipeline To Pacific"

MOSCOW -
The idea of an energy ptpt across one-fifth the circumference of the globe might
be dismissed as somewhat extravagant, even eccentric.

But the
Exx.crp.nrg [ID], the Mitsubishi Corp. of JPN and CHN's state oil company have
announced a partnership to study just that: a $12b, 4900-mile nrg.g ptpt from
the former Soviet republic of TKMan, on the CSP.Sea, to the Pacific - bypassing
Russia and Moscow's political and economic leverage.

The riches
of the Caspian - once under Moscow's control and now shared by several
independent former Soviet republics of central Asia - are among the last major
untapped nrg.p & nrg.g.rzv~ in the world [tntn]. And the Exxon
proposal, which could result in the longest natural gas export ptpt in the
world, is one of the boldest of the dozens of ideas for getting the energy to
the United States, Europe and Asia through new routes [tpt], east and west.

The search
is driven by the severe restrictions Russia has placed on the flow of oil and
gas from the Caspian countries through existing ptpt~ that cross its territory.

Many
industry analysts say the idea of a ptpt to the east, across China, is indeed
wildly unrealistic. But in even considering the proposal, these former Soviet
republics have shown how anxious they are to find alternatives that will speed
up energy development and reduce Russian influence.

And for the
Western oil companies, open discussion of proposals like this serve to put
Russia on notice: much-needed foreign investment in its own borders could be
delayed if Russia keeps hampering the flow of energy from its neighbors,
impairing the companies' ability to reap profits there.

Experts say
the Caspian could become the West's second largest supplier of oil and natural
gas, reducing reliance on the PER.G. But the future of these vast rzv~ has
created a new point of post-cold-war friction involving Russia, former Soviet
republics in Central Asia and the Caucasus, and the West.

There has been much bitterness over Moscow's efforts to continue to exert control over the
former Soviet republics, which are striving to be economically independent. The
United States is putting pressure on Russia not to interfere with the
development of the Caspian or the sovereignty of the countries nearby.

But the
region's development has been nearly paralyzed by Moscow's decision to restrict
the use of its energy ptpt~ to ship Caspian oil and natural gas to export
markets.

With its
current monopoly over ptpt~, Moscow has sought political, economic and military
concessions from the former Soviet republics. Russia has enlisted the support of
IRN, which also borders on the Caspian, to demand a veto over any energy deal
involving any of the other nations on the sea. Moscow has also insisted on
equity in projects that have already been negotiated.

AZR, KZX
and Western ["zpd"] companies have rejected the veto. Instead, the Caspian
republics are seeking a secure way to a Western sea - ptpt~ that can
get their oil past Russia.

"AZR and
Kazakhstan would like to have a ptpt circumventing Russia", sd Robert Ebel,
energy director at the Center for Strategic and International Studies in
Arlington VA. "When a ptpt crosses your territory, you have political leverage
over those putting oil into the ptpt"

The
Caspian, the world's largest inland sea, is at the center of the former Soviet
region that was regarded by Moscow primarily as a supplier of raw materials. But
with the collapse of the Soviet Union in 1991, Western energy experts began
predicting an economic boom in the region, and the republics began seeking the
benefits.

Together,
AZR, KZX, TKM and UZB have at least enough oil and natural gas to exceed the
peak daily output of the North Slope of Alaska, and probably much more,
geologists say.

By 2015,
when AKA and EUR's Nrt.S rzv~ are nearly exhausted, these four countries
should be producing, by conservative Western estimates, daily exports of about

1.80bB nrg.p and

13.0cF
nrg.g

But there
must be ptpt~ to get all that nrg to mkt

Western
oilmen and diplomats say that in its efforts to obstruct the ptpt development,
1993no:MVA stopped nrg.g xpt~ from TKM, a flow that had been worth

$2.0b/y.
The blockage has stripped away TKM's major cash earner and produced a steep ekn
decline.

In
addition, Moscow has restricted and sometimes halted nrg.p & nrg.g xpt from KZX.
This has slowed a $10b, 40-year investment by Chv.crp.nrg
[ID] at the giant TGZ.nrg.p.ggr in KZX because
there is no other way to export the oil
that could be produced.

There are
similar problems with a planned multibillion-dollar deal with British Gas and
Agip of ITL at the huge Knrg.g.ggr in KZXan, reducing it to a simple maintenance
contract.

Meanwhile,
Russia's gzz.mpy, Gzz.crp
, has demanded and received a 15% share of the Western
["zpd"] stake

One major player in the dispute has been Mnr1 Chernomyrdin
[QdnVS?], who once ran Gzz.crp
and
who is reported to control a large financial stake in the semi-privatized
company. His former aides at Gzz.crp, including Energy Minister Shafranik,Yurii
control the Russian energy industry and have demanded a strong Russian role in CSP.S prj~

"Russia
wants to preserve a measure of economic control and probably increased military
influence in the majority of former Soviet nations, and the Caucasus and Central
Asia are weak", sd Roberts,John who studies the ptpt issue for the London-based
consultants MEC. [!! No mention of ekn
INX]

To get the
energy to the market, the republics and their Western partners are examining two
basic ptpt routes, east and west.

West, to the Mediterranean two key proposals

NO.1:
For KZXan, the issue is a proposed $1.20b ptpt traversing Russia and
terminating at the BLK.Sea port of NVR. From there, the crude would go to the
Mediterranean for sale to Western customers

Chevron
[Chv.crp.nrg] has objected to footing most of the bill while the other outside partner,
the Oman Oil Company, puts in almost nothing. Chevron wants to reduce or exclude
the Omani company and its president, Deuss,John.

Russia
supports Deuss, who was originally brought in by the KZX~. Many Western analysts
think Russia simply wants to stall construction of a Kazakhstan ptpt.

NO.2:
The second big ptpt would start in AZRan, on the other side of the CSP.S.
There are two competing ideas.

NO2a: One is
to go north, through troubled QQN, also to NVR
NO2b: Avoids
RUS and traverses TRKy, ending at the port of CYN

This
dispute has its own historical and geopolitical character based in the
traditional rivalry between Russia and Turkey.

A
consortium of 10 oil companies is approaching an 95oc09:Deadline to decide which
route to use for the first AZR production next year. The republics do not want to grant Russia a
continued tpt monopoly. But the deciding factor for the consortium, officials
say, is how Moscow would react if Turkey were chosen.

On Monday, Russia tried to push Turkey out of the competition. A Russian official, trying
to match incentives offered by Turkey's Prime Minister Ciller,Tansu announced
a cut in ptpt txx.tariffs of 20 to 70% for 7 or 8y if Russia is chosen as the
sole route.

The ptpt
dispute has become an increasing irritant between Moscow and Washington.
President Clinton has raised the TGZ issue with President Boris N. Yeltsin at
least twice, Energy Department officials say, while Vice President Al Gore has
repeatedly asked Chernomyrdin to help clear the obstacles to TGZ.nrg.p, with no
results.

Washington
expressed its displeasure openly by publicly endorsing a Turkish route for the
AZRi ptpt, avoiding Russia. Energy officials say the Administration distrusts
Moscow's ability to consider the ptpt~ on a commercial basis, eliminating
political or military aims.

<>1995se18:se22; RUS SAR|{ptpt} "USA-Gzz.crp
Conference on Natural Gas Pipeline Standards and Project Finance"
This was the USA's first major industry-government meeting with Gzz.crp
Gzz.crp = the largest nrg-producing company in the world, with an estimated worth of over $115.0b.
The event improved USA opportunities to work with the company expected to dominate one of the world's
most important and fastest growing nrg markets in coming decades

Saratov, once closed to foreigners because of its thriving military industry, is a center
of Russia's natural nrg.g industry. At the site, which is southeast of Moscow
near the VLG.R, conference participants had the opportunity to see natural nrg.g
tptation and distribution facilities firsthand.

"The conference was a milestone in USA nrg relations with Gzz.crp",
said Kay Thompson, deputy director of [xpt] DOE's Office of Energy Exports and head
of the USA delegation to Saratov. "Besides the valuable contacts and extremely positive
relationships formed, the conference led to an increased understanding of Gzz.crp's
needs and immediate possibilities for commercial cooperation. Events such as this are
essential for helping USA industry maintain its edge over foreign competitors in the
Russian natural nrg.g market."

The
conference was held under the aegis of the Gore-Chernomyrdin {QdnV} Commission
[GQ.kmm] and the USA-Gzz.crp
Working Group, which is examining environmental {enx} and economic issues related
to nrg.g. The USA team on the working group is led by the Department of Energy (DOE)
and Environmental Protection Agency and is co-chaired by Thompson.

Conference topics included ptpt tkhies, enxal safety and monitoring, and emergency response
as well as USA sales and investment opportunities. Thompson noted that one major
issue discussed was the refurbishment of Gzz.crp's
trunk ptpt, a priority for the company.

"The conference served as an excellent forum to exchange technical information on
deployable nrg.g ptpt technologies. It also brought the Russian and American
nrg.g industry together to explore potential opportunities for commercial
partnerships and potential project finance sources," Thompson said.

A number of joint ptpt projects are already under way with Gzz.crp,
including a valve maintenance demonstration project with Sealweld Corporation
intended to reduce methane emissions. Another joint project with PIM Pipeline
Services, Inc., focuses on state-of-the-art techniques to locate ptpt coating defects

Approximately 60 USA participants, including 36 representatives of companies and
associations and nine representatives of USA financial institutions,
participated in the conference along with approximately 100 representatives from
the Russian natural nrg.g industry.

The USA-Gzz.crp
Working Group will report on its progress, including the results of this conference,
to the GQ.kmm at the commission's next meeting. Patricia Godley, DOE's Assistant Secretary
for Fossil Energy and a key figure on the Energy Policy Subcommittee of the GQ.kmm, is
spearheading DOE's contributions to GQ.kmm work.

<>1995fa?:RUS Yamal to POL nrg.g.ptpt|In connection with the planned
construction of a nrg.g ptpt from the Yamal peninsula in Russia to WEUR, CES
Consulting Engineers Salzgitter GmbH was appointed to carry out a full-scale
Environmental Impact Assesssment for the section between BRUS and GRMy.

<>1995oc,m:AZR Baku|Deal announced for construction of a ptpt across AZRjan and
GRZ to Supsa. TRKy is also a major competitor w/ Russia for any oil xpt~ coming
out of the rgn
\\[W]

This
article presents the reader with a rather fantastic scenario. When the IRQ oil
embargo is lifted and IRQi production resumes, this article speculates, IRQ may
choose not to rejoin OPEC, and enter instead into a partnership with Russia.
Combined Russian and IRQi output is greater than "the best Gulf oil production",
and such an arrangement could put Russia in a position to control world oil
prices [tntn.ekn]. Indeed, Russian and IRQi companies have already drawn up a
number of joint ventures "which are ready to roll the moment the IRQ oil embargo
is lifted"
\\
*--LOOP on "OPEC"

The stock
of extracting and injector wells at the end of 1995 stood around 16,000 units of
which 12,000 were producing wells.

The total
maximum crude throughput of SIDANKO's three nrg.p.zvdies is equal to 39 mT.

To tpt and
distribute oil products to customers, SIDANKO has 146 nrg.p.zvd product depots
with a total reservoir capacity of 3.90mcM
and 811 car filling stations, capable of selling 40mT.nrg.p products
annually. The reservoir capacity of the nrg.p.zvdies exceeds 1.50mcM

<>1996wi:What role does Russia play in the world economy?
{xpt-mpt tntn.ekn} Russia today is taking a bigger and bigger role in the
world economy. In particular, Russia has increased xpt~ of nrg.g, nrg.e, and
metallurgical, chemical and timber production. In 1995, Russia had its best xpt
year since reforms began in 1992, an increase of US$10.20b to $55.0b. At the
same time, imports increased by US$5.40b to $32.50b, widening Russia's trade
surplus from $17.70b to $22.50b (during the first three quarters of 1995).
Western Europe, as a whole, is Russia's largest trading partner:
39.5% of
RUS xpt to WEUR and
41.9% of
RUS mpt frm WEUR

Individual countries:

#1 = UKR:
09.1%
($5.0b) to UKR and
13.2%
($4.30b) frm UKR

#2 = GRM:
07.5%
($4.20b) to GRM and
15.0%
($4.90b) frm GRMy

#3 = USA:
05.7%
($3.10b) to USA and
05.7%
($1.90b) frm USA

xpt~ to the
USA rose by 27.8% and included aluminum products, iron and steel products, and
pig iron. Imports from the USA increased by 25.1% and included poultry meat,
milk/dairy machinery, medical instruments, tobacco products and machinery parts.

RUS trade
surpluses with South America and Asia also surged during the first nine months
of 1995

xpt~ to
South America with the highest growth were {nrg.p} petroleum products,
newsprint, iron and steel.

For Asia,
it was aluminum, fertilizer, nickel & nrg.c having the largest growth.

a The portion of total resources has been assessed as being exploitable under local
economic conditions and available technology. [ Source for all countries except Russia: OGJ]
\\
*--LOOP on "OPEC"

<>1996ja02:NYT editorial re.C.ASA & nrg.g, "The New
Great Game In Asia"

While few
have noticed, Central Asia has again emerged as a murky battleground among big
powers engaged in an old and rough geopolitical game. Western experts believe
that the largely untapped oil and natural gas riches of the CSP.S
countries could
make that region the PER.G of the next century. The object of the revived game
is to befriend leaders of the former Soviet republics controlling the oil, while
neutralizing Russian suspicions and devising secure alternative ptpt routes to
world markets. [tntn.ekn]

To prevail
will require persistence and tact, but the resources justify the attempt. So
far, Washington has managed with some skill to avoid obvious pitfalls in the
game's opening moves.

The core
problem is Russia's determination to control the flow of oil and gas from AZR,
Kazakhstan, and TKMistan, whose rulers understandably wish to evade its
restrictive embrace. The two major ptpt systems from those areas now run north.
Both pass through Chechnya,where one system serves Russia and the other the
export market, via the Russian Black Sea port of NVR. There is no ptpt heading
south.

Quietly and
rightly, Washington has sided with the Central Asian wish for a more secure
southern route. The State Department early last year endorsed an alternative
ptpt to Turkey. No less than seven possible routes are being considered to bring
oil and gas south to ports in Turkey, Georgia, or IRN.

The United
States' Exxon [ID], China's state oil company, and Japan's Mitsubishi Corp., in
another ambitious scheme to bypass Russia, said in September that they were
studying the construction of a natural gas ptpt that would cost $12 billion and
would stretch from TKMistan on the Caspian over an enormous arc 4,900 miles to
the Pacific.

But what
these outside partners regard as a hardheaded commercial decision is viewed by
many Russians as incipient interventionism. Russia has historic and legal claims
to the CSP.S and has insisted that it must be a party to any agreement on sharing
oil and natural gas riches.

Moscow's
claims go back to the 19th century, when czarist armies conquered these Islamic
emirates in an expansionist drive that Victorian England saw as a threat to its
rule in India. This resulting rivalry in Central Asia, Kipling's Great Game,
continued as a shadowy duel even after the Bolsheviks took over the czarist
empire.

Everybody could benefit in the revived game by
agreeing to split the winnings. Western and Japanese capital is essential to
developing Caspian fields, and some oil companies are clearly willing to plunge
forward: Chevron Chv.crp.nrg [ID], the world's
fifth biggest, has already invested $700 million into tapping the huge TGZ.nrg.p
rzv~ in Kazakhstan.

The oil,
however, is more likely to remain underground for years as various ptpt schemes
remain pipe dreams. So balanced are contending parties, so disorganized are the
new Caspian republics, and so abundant are known rzv~ elsewhere, that drift
is more likely than decision. Ending the deadlock may take a compromise.

1992je:CAS.ptpt formed over a proposed 900-mile, $1.20b oil xpt ptpt via
Kropotkin to a new oil terminal on the Taman peninsula near the Russian BLK.S
port of NVR. The deal would reduce Oman's share in the consortium to around 10%,
with KZXan and Russia making up another 40% combined. This move followed the
resignation in January 1996 of Oman Oil Company President John Deuss, who had
originated the KZXan-Oman relationship (as well as the CAS.ptpt) and had for
several years been a key advisor to the KZX gvt on nrg.p matters. In the revised
CAS.ptpt (dubbed by some as CAS.ptpt II), foreign oil companies will account for
a combined 50% of the project. These companies include:

If
constructed, the ptpt would represent a major link between TGZ and EURan xpt
mkt~. In addition to its commercial value, the ptpt would have significant
political implications for the region -- specifically, the extent of Russian
influence over the relatively new independent states like KZXan. One option to
routing CSP.S oil through Russia would be a ptpt to the new GRZ terminal of Supsa
[CF:1995oc,m]

After
Russia, KZXan is the second largest oil producer among former Soviet republics.
In 1996, KZXan hopes to produce around
0.480mB/d
nrg.p, about the same as it produced in 1994 and 1995. Most of this oil is
produced by KZXan's two state holding companies -- Munaigaz and Kazakgaz --
largely from the Mangyshlak area in western KZXan near the CSP.S.

[IRN] KZXan's oil production currently is xpted to Russia as part of a swap
arrangement whereby Russia supplies crude to two of KZXan's three nrg.p.zvdies
(at Pavlodar and Chimkent). KZX crude oil xpted to Russia is generally
nrg.p.zvd- at Samara and Ufa. In early April, 1996, the presidents of IRN and
KZXan discussed a plan to xpt KZX oil from CSP.S nrg.p.ggr to northern IRN, in
exchange for IRNian nrg.p xpt~ out of the PER.G.
F/1993ap/:Chv.crp.nrg agreements w/KZX.
F/1995wi/:cutbacks on that deal.

Mob.crp.nrg announced that it had purchased from the
Kazak [sic!] government a 25% share in the consortium developing TGZ.
Chv.crp.nrg [ID] and
KZXan's Tengizmunaigaz own the other 50% and 25%, respectively. Chv.crp.nrg, which has
spent nearly $1.0b on Tengiz development, reduced spending significantly on the
project due to disagreement over xpt routes for any oil produced. This
disagreement ties in with a broader debate between Russia and other CSP.S rgn
states over how the Sea should be treated under international law. Russia cites
a 1940 treaty between the Soviet Union and IRN, which says that the Caspian is
not a sea, and therefore should be developed in common by all five coastal
states. KZXan disputes this view, and counters that each state should have
rights to oil and nrg.g resources developed in their own offshore areas.

{Occ.crp.nrg Exx.crp.nrg [ID]}
Recent joint venture announcements include development of the Karakuduk oil
field in western KZXan by USA cmp Chaparral Resources. Karakuduk is estimated to
contain 74.0mB.nrg.p (proved rzv~). Canadian Occ.crp.nrg (Canoxy) is heavily
involved in developing an estimated 150mB.nrg.p (proved & probable rzv~) in
central KZXan's Turgai basin. CAN.Occ.crp.nrg also is prequalified for a 95% stake in
Yuzhneftegaz, which operates in the Kumkol oil field, also in central KZXan.
Exx.crp.nrg is expected to bid for an 85% stake in KZX oil producer Aktyubinskneft,
which produces about 0.050mB/d.nrg.p (crude) from the Zhanazhol and Kenkiyak
nrg.p.ggr near the Russian border, much of which is sent by rail to Russia's
Orsk nrg.p.zvdy.

REFINING

{KYR SBR}
KZXan has three nrg.p.zvdies (at Pavlodar, Atyrau, and Chimkent) which supply
population centers in, respectively, the northern, western, and southern areas
of the country. In addition, KZXan xpt~ products to Kyrgyzstan and southern SBR.
Pavlodar and Chimkent are supplied mainly by crude from Western SBR tpted by
ptpt, while Atyrau runs solely on domestic crude. KZXan's Oil and Gas Minister
Balgimbayev is aiming to upgrade the country's refining capacity by: 1) building
a new $1.50b nrg.p.zvdy at Mangystau; 2) reconstructing the Guryev nrg.p.zvdy at
Atyrau; and 3) adding a catalytic refining unit at Chimkent.

((nrg.g JPN
FRN CAN ENG)) KZXan also has moved forward with at least 2 other large,
internationally cooperative refining projects during the past year or so: CF
1994ap & 1995au))

KZXan also
has granted a $1.2 billion contract to France's Krebs-Eurysis to modernize
Atyrau, enabling it to produce more light products, and to upgrade its overall
capacity from 103,800 b/d to 120,000 b/d. Finally, the Kazak government is
cooperating with London-based Vitol in building a new catalytic cracker built at
the Chimkent nrg.p.zvdy.

((Mob.crp.nrg [ID] BP.crp.nrg ID
Shell.crp.nrg)) Mobil is part of 2 other projects besides TGZ. One is to explore for oil
and nrg.g in the 4-million acre Tulpar bloc located in the northwest part of the
country. The other -- the CSP.S
Consortium -- is a group of seven international
companies chosen to conduct a seismic survey by 1997 of KZXan's sector of the
CSP.S. CF 1993de

((nrg.g ITL Gzz.crp
)) KZXan contains around 83 tcF of natural nrg.g rzv~, of which about 62
tcF are associated with oil or other liquids.
Re. giant Knrg.g.ggr CF: 1995mr

Unlike
Knrg.g.ggr nrg.g, which is aimed primarily at xpt markets, the 13.0tcF nrg.g
rzv~ in the TGZ field are slated largely for domestic consumption. In recent
years, KZXan has produced 200 to 250bcF/y.nrg.g (about 1% of former Soviet total
nrg.g production), although this volume has been falling sharply in recent years
due to the refusal of Russia's nearby Orenburg nrg.g.zvd to take additional
Knrg.g.ggr nrg.g

((KZX TKM
RUS UZB)) In general, the Kazak nrg.g sector faces a lack of infrastructure,
especially ptpt~, connecting nrg.g producing areas in the northwest of the
country from nrg.g consuming areas in the south and east. As a consequence,
KZXan has been forced to xpt its nrg.g production to Russia, and to meet 90% of
its own natural nrg.g consumption needs by mpt~ (mainly from TKMistan, RUS &
UZBistan). KZX owes UZB $50m for these mpt~. Given an expected long-run surge in
domestic nrg.g demand (for use in industry and nrg.e generation), the Kazak
government plans to expand the country's nrg.g transmission grid to help cover
350bcF of domestic consumption.

The
transformation of world economic order in this end of the millennium is
dominated by two major processes: the emergence of the Pacific Rim as the most
dynamic area of the new global economy [tntn.ekn]; and the transition of Russia
from the Soviet Union to a market economy and an open society. Both processes
come together in the gradual integration of SBR and the Russian Far East in the
Pacific economy. This is a phenomenon of historic proportions, in spite of
obstacles that must be overcome, because of the complementarity between the
needs and offerings of SBR and the Asian Pacific. The Asian Pacific economy,
arguably the fastest growing and most productive industrial area for the years
to come, is highly dependent on nrg and natural resources. CHNa and, to a lesser
extent, Indonesia and Malaysia, certainly have considerable energetic and
mineral resources. Yet the extraordinary acceleration of economic growth in
CHNa, JPN, and the newly industrialized countries in Asia increases
exponentially the demand for such resources in the Pacific region.

SBR and the
Russian Far East conceivably constitute the Earth's largest reservoir of natural
resources, including nrg, still largely untapped. Furthermore, SBR's skilled
scientists and technicians, as well as an educated population, provide the
necessary labor force for a process of economic development, investment, and
trade that will certainly go beyond the limits of a natural resources economy.
While it is true that markets for nrg and raw materials are global [tntn], the
scale of SBRn rzv~, tptation costs, and political volatility in other areas
of the world (particularly in the Middle East) provide a unique opportunity for
interaction between the 32 million people of SBR, with its huge assets in
natural resources, and the Asian Pacific countries (with a population in the
billions, depending upon the units of counting), currently engaged in a process
of industrialization, urbanization, and trade of unprecedented scale.
Furthermore, firms from all over the world — and particularly American firms —
are now so deeply entrenched in the Asian Pacific and in Pacific trade that
their prosperity increasingly depends on the prosperity of the Pacific Rim. The
Pacific economy will be to the 21st century what the Atlantic economy was to the
20th century. And Russia, because of the extraordinary potential of SBRn
resources, could be a major factor in the new Pacific-centered, geo-economic
system. SBR could well be the missing link in the Pacific Rim.

However,
the obstacles for the dynamic integration of SBR into the Pacific economy are
formidable — not only geographic and climatic, but technological, economic, and
institutional as well. The Russian Far East was closed to foreigners as recently
as 1992, and the region has a tormented history of missed opportunities
(Stephan, 1994). In the early 1990s, the chaotic management of post-Communist
Russia's transition to a market economy induced a deep economic crisis and
reduced to shambles much of the industrial, tptation, and urban infrastructure
of SBR and the Far East. Foreign investors were attracted by the prospects of
high profits and huge markets, but were soon discouraged by uncertainty,
bureaucracy, risk, and lack of support, so they often withdrew, leaving the
field open for speculators and smugglers. The conversion of the defense industry
largely failed, and the management of nrg industries was troubled by infighting
and undermined by technological obsolescence and short-sighted exploitation
strategies. Furthermore, Russia's Pacific neighbors often clung to their
historical nationalist claims, aiming to take revenge on a weakened power rather
than look forward to new cooperative links. And yet, without Russia, the Pacific
economy would be burdened by extreme dependence on nrg and natural resources.
Without the Pacific connection, Russia would not be able to bring into value
most of its territory, and would lose the opportunity to redefine its economic
history and geography. Without the Pacific connection, SBR and the Far East
would remain the harshest, most forgotten regions of an impoverished, weakened
nation, triggering centrifugal tendencies that could contribute to destabilizing
an already tense Asian Pacific area.

This study
attempts to contribute to the understanding of the complex process of
integration between SBR and the Russian Far East and the Pacific Rim by
analyzing empirically current trends of regional development and foreign
investment and trade. While we open the study with an overview of economic
relations between SBR and the Pacific, we will focus our investigation on the
oil and nrg.g industry. This is both for practical and analytical reasons. From
a pragmatic point of view, the limited resources allocated to this study forced
us to concentrate on one industry in the area about which we already had some
level of knowledge. From an analytical point of view, it is around oil and nrg.g
that most prospective foreign investment and trade seems to gravitate. And it is
oil and nrg.g that are the most important strategic resources in SBR, in spite
of the current and future importance of other resources such as nrg.c, precious
and rare metals, timber, and fish, among others. Indeed, SBR accounts for about
one-third of the world's rzv~ of natural gas, and for about 10% of its oil
rzv~ (a higher figure than that of any other country outside the Middle
East).

Our study
will try to identify both the prospects of and obstacles to the process of
internationalization of SBRn oil and gas, starting with the analysis of the
process of formation of the industry, since the institutional past and
industrial history still cast a giant shadow on current developments. After
reviewing the overall evolution of the oil and nrg.g industry in SBR since the
1960s, we will focus on current developments in SXL, the most promising Pacific
connection of SBRn nrg resources, and the one that, because it is still in its
preliminary stage, better allows us to observe the formation of the 21st
century's SBRn oil and gas. We will conclude our study by integrating our
findings into the broader framework of alternative scenarios for the evolution
of economic and political relationships between Russia and the Asian Pacific.

The data
and analyses used in this study come from a variety of sources, gathered through
different methodologies by the three researchers who are co-authors of the
study. The core of our empirical research is the field work conducted by Emma
Kiselyova and Manuel Castells in TKO, XBR, SXL, NSB, and Moscow from May to July
1995. We conducted a series of interviews with government officials, company
managers, experts, and researchers in this field of inquiry (see list of
interviews in Appendix). Our knowledge of the oil and nrg.g industry in SBR was
initially built by a study that Valery Kuleshov and Manuel Castells directed in
1992-93 at the Institute of Economics and Industrial Engineering in NSB. In the
framework of that study, Manuel Castells and Emma Kiselyova conducted field work
research in Tyumen and Nizhnivartovsk in 1992. Some of the findings and insights
of this field work have been used in our current study. Additionally,
documentation from different sources was collected and analyzed in Berkeley from
1994 through 1996. The overview of SBRn-Pacific economic relations was prepared
by Alexander Granberg on the basis of data gathered and analyzed at the SOPS
Institute in Moscow. Throughout the two years of the research process, the three
researchers involved in the study corresponded and interacted in and between
Berkeley, Moscow, and NSB, face to face or by e-mail or fax, to coordinate and
integrate findings and analysis. Ultimately, the convergent data analysis led to
the present report, whose sources are specifically indicated in the text and in
the endnotes for each argument presented. While the character of our research is
exploratory, we have attempted to ground our hypotheses on the state of
empirical knowledge on the topic to build a foundation from which to proceed in
the investigation of an essential theme that has rarely been the object of
scholarly research: the integration of SBR's new market economy into the Pacific
Rim.

[Monographs,
sponsored by The
Institute of Urban and Regional Development [IURD],The University of
California at Berkeley]

Russia's Energy Industry Is the
Key to its Success -- or Failure by Peter Rutland
Russia's Natural Gas Leviathan by
Peter Rutland
Energy Crisis Spurs Ukraine and
Belarus to Seek Help Abroad by Ustina Markus

<>1996au:TURKEY'S NEED FOR NATURAL GAS [
http://www.turkey.org/releases/082696.htm]
((TRK GO 997oc31))
By the year 2000, TRKish demand for natural gas, which is
6 bcM
presently, will, at minimum, measure
21 bcM . By
2020, that demand will at least double.

The only natural nrg.g
Turkey imports via ptpt is from Russia. Turkey imports additional sources of
natural nrg.g through other means.

TRKey depends on
natural nrg.g from Russia for 75% of its domestic demand. Other forms of natural
gas, such as LNG or liquified natural gas, is very expensive to import due to
shipping, processing and storage requirements.

Clearly, Turkey needs
to diversify and minimize the costs of its natural nrg.g imports.

If Turkey cannot
import natural nrg.g via a direct ptpt in the forthcoming year, Turkey's ability
to meet its nrg requirements will be in serious jeopardy, thus, adversely
effecting all sectors of TRKey's economy and household services. (See attached
USDOC: ITA report on "The electrical generating equipment in Turkey," February
1994)

Among the
alternatives, the IRNian natural nrg.g ptpt project is the easiest and most
feasible. However, it will take at least a year to construct such a ptpt.

Because of this
pressing reality, TRKey is compelled to arrive at a contract in the next 1-2
months in order to ensure its urgent requirements for its nrg needs.

The Natural Gas
Pipeline Agreement [ptpt.trt] between the TRKish Minister of Energy and the
IRNian Minister of Oil was originally signed in May of 1995. (See "Turkish
Perspectives in Turkish-US Relations Concerning PER.G Security in the Post-Cold
War Era: 1989-1995," Mahmut Bali Aykan, Middle East Journal, Volume 50, No. 3,
Summer 1996, page 355.) The Agreement signed on August 12th was a duplicate of
that original with some minor changes.

Contrary to some
allegations within the framework of the IRN Oil Sanctions Act of 1996, the ptpt
project is not an investment in IRN but a means to realize a trade deal for
importing natural gas. The deal envisions each party constructing part of the
ptpt on its own territory.

ENERGY
NEEDS OF TRKEY:
Source:
USDOC, International Trade Administration report on
"The electrical generating
equipment market in TRKey," February 1994:

"TRKey's ...
electricity demand ... is expected to increase to 308 billion kWh by the
year 2010. TRKey is expected to be faced with an nrg shortage at the
beginning of 1996. Even if all current hydroelectric potential can be used
entirely, the total output thus obtained will be far from sufficient to meet
anticipated requirements by the year 2000. According to estimates, without
using nrg resources other than hydroelectric or lignite for power
generation, TRKey's hydroelectric economic capacity will be fully utilized
and thermal nrg resources will have been exhausted by the year 2010.
Therefore, imported natural gas, imported nrg.c and nrg.n are needed to
bridge the gap. Turkey has been importing natural nrg.g from Russia since
1987 for electricity production and residential heating in large cities.
Turkey's consumption has increased since that date from 350 mcm
to 4.4 bcM (bcm) in
1992, and 5.5 bcm in 1993. (By the year 2000 three new C.C.P.Ps will be
built making the total installed capacity to reach 4.500 MW.) The forecast
is that demand for natural nrg.g will increase to 25-30 bcm by the year 2000
and 35-40 bcm by the year 2010. Currently 60% of the natural nrg.g is used
in power generation, 30% by domestic industry and 10% for residential
heating. There are proposed plans to carry natural nrg.g from TKMistan and
IRN to European markets via ptpt~ through TRKey from which TRKey would also
obtain natural nrg.g for power generation. The US Trade and Development
Agency (TDA) has provided a grant to the TRKish government's ptpt company,
BOTAS, for a feasibility study for a second Liquid Natural Gas (LNG)
terminal."

<>1996au22:TRKy to sign nrg.g ptpt deal with Russia

TRKey's
state ptpt concern Botas said it will sign an agreement with Russia end
September for a $ 1.10b natural nrg.g ptpt from Russia through Turkey's
eastern border. Botas said in a statement that the ptpt would be 1160km
(725m) long and be able to carry up to
16.0bcM/y

The
existing ptpt from Russia will be upgraded through a loop and compressor
system, which is currently being built in Pendik, to the east of Istanbul,
under a $40m project. Turkey, in urgent need of energy resources, struck a
23-year,
$23.0b agreement with IRN in early August to get
03.0bcM/y nrg.g beginning in 1999 through a ptpt. The amount will raised up
to
10.0bcM/y by 2005.

The
design of the new ptpt from Russia will be completed by the end of this year
and construction work could begin in 1997. Turkey would receive a total of

9.20bcM
nrg.g this year, up 2.40bcM from last year, including LNG imports equivelant
to a total of
2.480bcM.

Expansion work at an LNG terminal in western Turkey has recently been up for
tender and this would add a
4.50bcM
to supply in 1997. Botas is considering another LNG terminal. Botas has
agreed with state Turkish Petroleum (TPOA; ?=TRK.crp.nrg?) to have it build an underground
nrg.g storage in western Marmara rgn with a capacity of
2.50bcM.

<>1996se:Exx.crp.nrg [ID]
agreed to establish the POLish Petroleum Development Company with Shell.crp.nrg

<>1996se27:AFG capital Kabul taken by Taliban|
Unocal drew closer to Taliban and thus closer to success with its plan to build a ptpt frm
TKM to PKS [LeVine.GLORY ch#17:290-310]
But soon Osama Bin Laden and other SaA warriors, active in AFG since SSR/AFG wrx, plus the
evident attrocities of of the Taliban embarrassed Unocal and USA stt.dpt who had been pushing
together to promote this dreamy plan to get TKM nrg.p and nrg.g to CHN<>1996oc:POL signed a 25-year contract w/ Gzz.crp
. Annual volumes of nrg.g will increase to
14.0bcM
(about 494.0bcF) once construction is completed on the Yamal ptpt

2010:YAM-EUR.ptpt will reach full capacity:
65.70bcM
(about 2.30tcF)

1997:YAM-EUR will begin delivery to POL:
03.0bcM (about 106.0bcF).

POL segment
of YAM-EUR.ptpt is being built by Europol Gaz {bdg} in a joint venture with
Russia's Gzz.crp
at a cost of $2.50b (the largest infrastructure investment in the
country to date).

Poland
currently produces small volumes of crude oil and natural gas, but relies
heavily on imports to meet nationwide demand. Traditionally, oil and natural gas
imports have come via ptpt from Russia. To reduce dependence on Russia, Poland
has begun to import North Sea and Middle East crude oil and has opened a
cross-border exchange link integrating its natural gas transmission system with
Germany.

To quell
criticisms over growing dependence on Russian energy, the government plans
additional natural gas storage facilities and is considering future imports of
liquefied natural gas (LNG) from QTR, NGR, NOR, and ALG. It is also encouraging
foreign investment in its own upstream oil and gas sector and has obtained loan
assistance from the World Bank and the European Investment Bank.

Comline
reports that the Japan Gas Association is one of the sponsors of an exposition
of nrg.gl vehicles in Shinjuku's Park Tower in JPN. All of JPN's natural nrg.g
auto manufacturers will participate in the show. Natural nrg.g vehicles drive
150-200 km between fill-ups, are cleaner to operate than ordinary nrg.g or
diesel vehicles, and emit far less nitrous oxide and carbon monoxide than their
traditional fuel counterparts. Late last year JPN's Ministry of Transport {Mtpt}
approved natural nrg.g vehicle for ordinary usage. By the end of October 1996,
there were 917 natural nrg.g vehicles were on the road in JPN, including buses,
sanitation vehicles, and other public-service autos. The nrg.g industry hopes
that 200,000 will be in use by the year 2000. The Shinjuku show features
vehicles that are already for sale or that will be offered in the near future.

As of early
1996:
2325 crude
nrg.p & nrg.g.ggr~ had been discovered in Russia, including
1549
nrg.p.ggr
394 nrg.p and gas/oil and nrg.g
condensate ggr~, and
382 nrg.g and nrg.g condensate ggr

Already-explored oil rzv~ account for an aggregate of not more than 34% of
total nrg resources, compared to only 15.6% for already-explored nrg.g
condensate rzv~. More than three fourths -- about 76% -- of discovered oil
rzv~ are concentrated in 12 individual and 156 major deposits. Western SBR,
the major oil-producing province of Russia, contains 72.2% of explored
resources, the Ural-Volga region 15.2% and the Timan-Pechora province 7.2%.
About 3.5% of discovered rzv~ is located in Yakutia, Krasnoyarsk territory,
Irkutsk region, on the Pechora bed and on the Okhotsk Sea shelf.

Many major
deposits have already been exhausted to a significant degree, especially:
Samotlor
(65%)
Fedorovo
(58%)
Mamontovo
(72%), these three deposits of West SBR
Romashkino
(85%)
Arlan (77%)
these two in the Ural-Volga region
Usinsk
(58%) in Komi

Between
1986 and 1990, 515 oil and nrg.g deposits were discovered, including 46 major
and 113 medium-sized deposits. In 1991-1995, the number of discovered deposits
totaled 215, including 7 major and 28 medium deposits.

1986:1991;Each discovered deposit contained an average
10.80mT.nrg.p and
69.60bcM
nrg.g

1991:1995;these figures fell to
03.8mT.nrg.p and
11.5bcM
nrg.g

The
production of liquid fuel has fallen significantly as well.

1987:1988;
569.50-568.40mT.nrg.p & nrg.g condensate per year (peak)

1994:1995;
306.50-317.00mT

Between
1988 and 1995, crude oil production decreased by 263.0mT (46.2%)

In West
SBR, it fell by 47% and in other regions by 44%. Domestic consumption of oil and
nrg.g condensate did not change significantly, rising from 205.4-215.1 mT in
1986-1989 to 216-220 mT in 1990-1993. In 1994-1995, it fell to 190.5-181.5 mT.

Declining
oil production came about from the following causes:
the lack of
modern technology and equipment for developing deposit collectors;
a
disequilibrium in oil, equipment and materials prices;
the loss of
old systems of centralized management, which were not replaced by any new
system;
the 350%
fall of drilling in 1988-1995;
slow
development of newly discovered deposits
On the SXL
shelf alone, major deposits discovered in the 1970s and 1980s have not yet been
developed despite significant investments and huge potential markets in JPN,
SKOR and Taiwan;
slow
development of West SBR's resources;
long
periods of idleness for many oil wells (27% of the time as of November 1995).

Russia is
first in the world in terms of explored nrg.g rzv~, which totalled
49.0tcM on
1995ja01, with an exploration rate of 24.6%

Over 78% of ABC1 explored rzv~
and 90% of production are located in Western SBR (especially the Yamalo-Nenets
Autonomous District).

nrg.g
rzv~ are largely concentrated in individual and major deposits:
21 individual nrg.g.ggr (with
rzv~ standing at more than 500bcM each) = 74.1% of explored nrg.g rzv~
118 major
nrg.g.ggr (30 to 500bcM) for 23.3%
591 medium
and small nrg.g.ggr for only 2.6%.

During the
period of economic reform, Russia's fuel and power complex endured significant
changes. Between 1985 and 1990, primary fuel production rose 13.3% and
consumption by 9.5% -- respectively, from 1.6900bT to 1.9140bT of conventional
fuel and from 1.160bcM to 1.270bcM
of gas).

From 1991
through 1993, both production and consumption of primary fuel fell respectively
by 22% and 12.7%.

The pace of
decline was still higher in 1994-1995. The balance of fuel in Russia is
environmentally clean, with the share of nrg.g standing at 46.2%, oil 29.2%, and
nrg.c 18.4%.

It is
expected that in the years to come, annual nrg.p xpt~ to countries outside the
CIS will reach
100-130mT/y
nrg.p
130-150bcM/y nrg.g

Annual Oil
and nrg.g xpt~ to the CIS and Baltic states should reach
30-50mT
nrg.p
90-120bcM
nrg.g and
20-39mT
nrg.c

Annual
production for the years 2000-2010 is forecast at
370-400mT
nrg.p
700-900bcM
nrg.g and
350-380mT
nrg.c

Preliminary
data from Russia's Main Energy Computer Center show that the country produced
150.160mT
nrg.p, right in line with output targets but 2% less than in the same period
last year
27.460mT (7% above target levels) for Luk.crp.nrg
17.470mT (2% over target) for
Yukos
16.450mT (2% below target) for
Surgutneftegaz
12.520mT (3% more than planned)
for Tatneft. (3)

Russia's domestic oil xpters in this period shipped more than
09.10mT
in order to carry out state programs and intergovernmental agreements.
03.10mT
= xpt nrg.p shipped by joint ventures operating in RUS

The
greatest volume of oil produced by joint ventures was xpt- to GRMy,
according to reports from Mekn

M.nrg
xperts noted that oil xpt~ grew by 1.2% in these months compared with the
same period last year. Oil producers' share of the total volume of xpt was
about 70%

USA DOE
website report on recent years nrg.g production and xpt:

1996
total net nrg.g xpt =
6.9tcF
(highest ever, exceeding the record set in the previous year)

Russian
net gas exports outside the FSU in 1996 were also a
record:
4.40tcF
exceeded the previous high in 1995 by 0.20tcF (almost a 5% growth)

These
high export levels were achieved despite a slow decline in gas production
from
22.60tcF (1992) to
21.00tcF (1995) and
21.20tcF (1996)

Increased gas xpt made possible
by a decline in domestic consumption

During
the 1992-1996 period gas consumption fell by
02.10tcF

1996:total net nrg.g xpt~ reached new highs, and the destination of exports
has changed over the
past few years. The share of net exports to countries outside the FSU has
increased from
51%
(1992) to highs of
64%
(1995-1996)

The breakup
of an aging Russian oil tanker and the subsequent oil spill in mid-January means
more than the pollution of abalone, seaweed and other staples of the JPNese
diet. This accident, which occurred off the western coast of central JPN near
Fukui Prefecture, symbolizes some of the difficulties for the two neighbors of
Northeast Asia doing business together.

There is
certainly mutual need. The Russians have oil and other natural resources in
abundance. The JPNese have an appetite-and talent-for exploiting them to
manufacture the very consumer goods that the Russian people crave. But the
creaky nature of the Russian economy, illustrated in this instance by a
26-year-old tanker, Nakhodka, that broke up in heavy seas, is anathema to the
well- prepared, well-rehearsed and buttoned up nature of JPNese economic
activity. The 0.1330mB.nrg.p (heavy fuel oil) carried by the nrg.p.nvy, almost
half of which escaped, are despoiling Russo-JPNese potential as much as the
shoreline itself.

There's
another problem in Russia-JPN relations, dirtier and more enduring than this
spill, the second-largest in JPNese maritime history. Russia and JPN are at war,
at least on paper. The two
neighbors, adversaries in the Russo-JPNese War of 1905 and again in the middle
of the century, potential economic allies always, still have not put pen to
paper to sign a peace treaty ending World War II. Four sparsely inhabited little
islands off JPN's northern island of HKD are the ostensible reason why.

These
islands, with the almost rhythm-and-blues names of Kunashiri, Etorofu, Habomai
and Shikotan and a total population of about 20,000, were occupied by the
Russian Army in the closing days of World War II. To do so, Moscow broke a
long-standing neutrality pact with TKO and declared war in August l945, three
days after the US atomic bomb was dropped on Hiroshima. They remain in Russian
hands, an occupation that long served as the perfect excuse for the JPNese
government to avoid mending its fences with the Evil Empire during the Cold War.

But the
islands are a poor excuse today. The Russians have acknowledged that less than
3,500 military men are stationed there, and Habumai is without any military
presence at all. In 1993, a joint declaration between Russian President Boris
Yeltsin and then JPNese Prime Minister Morihiro Hosokawa set the wheels in
motion for a settlement of this contentious issue. The keys were joint
development of the islands and a gradual return of JPNese sovereignty.

But,
despite this and the first visitation rights for more than 2,700 Russians and
JPNese displaced across the island divide, no agreement has been reached and
thus no official end to the hostilities of 1945.

More than
anything else, this territorial dispute has inhibited the evolution of mutually
beneficial JPNese-Russian trade. The JPNese, more than 95% dependent on imported
oil, have long been eager-and willing to pay-for a ptpt from the shores of the
Sea of JPN to the bounteous Tyumen nrg.p.ggr in the heart of Russian SBR, over
2,500 miles away. Overtures have been made, plans drawn and some agreements with
major JPNese construction companies signed. But it hasn't happened.

Sergei
Khruschev, the research-oriented son of the late shoe-pounding Soviet premier
Nikita Khruschev, wrote in Asia Inc magazine last year that Russia's Far North
accounts for
65% of Russia's oil rzv~
85% of
natural gas
63% of
nrg.c
90% of
nickel
67% of
timber
80% of the
gold and
95% of the
diamonds

This is
motivation for JPNese business with a capital M.

But a
JPNese government paper last year [1996], JPN's Policy on the Russian
Federation, splashed official cold water on this potential. "Due to continuing
non payment of uninsured trade debts and inadequate legal and taxation systems
in Russia, there is little economic activity between JPN and Russia," the report
stated. "Conditions for trade and investment between the two countries need to
be improved in order to stimulate private-sector economic activity."

Fresh
efforts by the JPN-Russian InterGovernmental Commission on Trade and Economic
Problems, coupled with the stimulus of a meeting between Russia's foreign
minister Yvgeny Primakov and Japan's Yuhiko Ikeda in late November last year
[1996no], prompted the release of a $500m xpt-mpt Bank Fund frozen since 1991
because of political and economic turmoil. But official aid for reasons of
politics and commercial trade for reasons of profit are two very different
animals.

Two way
trade between the neighbors amounts to the pitiful total of $4 billion, one
third the level of trade between Russia and its historic foe, Germany.

The Russian
embassy in TKO, like the massive nation it represents, is central in the psyches
of the JPNese. Situated in the heart of downtown, almost in the shadow of the
TKO Tower and cheek by jowl with the American Club, the epicenter for successful
expatriate business people, it has, in the eyes of the commercial real estate
developer-and again like Mother Russia itself-almost classical "location!
location! location!" advantages.

Yet the
ministers and counselors who call it home are more occupied with securing a
final peace treaty that will close the book on hostilities that ended 50 years
ago than with facilitating commercial contracts for today. And doubtless they're
more energized by the dirty aftermath of the broken tanker Nakhodka than the
fresh opportunity represented by its namesake, the port city Nakhodka, the
closest Russian city to JPN, terminus of the Trans-SBRn railway and gateway to
Russia's Far East cornucopia of fish, timber and minerals.

For all
their potential, Russo-JPNese relations are mired in the past pluperfect.

5. RNGS
IS STRUCTURED AS A JOINT STOCK COMPANY OVER 550 SHAREHOLDERS, INCLUDING MANY
OIL AND GAS COMPANIES OPERATING IN RUSSIA SUCH AS
RUSSIAN GAS MONOPOLY
GAZPROM [Gzz.crp
]
THE
PREMIER RUSSIAN VERTICALLY-INTEGRATED OIL COMPANY LUKOIL [Luk.crp.nrg]
THE
MITSUBISHI CORPORATION OF JAPAN {Mcb} AND
THE
RUSSIAN OIL AND GAS WORKERS UNION

RNGS
RECENTLY COMPLETED A PRIVATE PLACEMENT WITH WESTERN INVESTORS OF THE FIRST
TRANCHE (3.2%) OF ITS GOVERNMENT-OWNED SHARES, AND PLANNED PLACEMENTS IN
1995 WILL INCREASE FOREIGN OWNERSHIP IN RNGS TO 10%. ULTIMATELY, THE
COMPANY'S GOAL IS 30% FOREIGN OWNERSHIP AND LISTING OF RNGS SHARES ON A
MAJOR EUROPEAN STOCK EXCHANGE.

[…]

9. IN
ITS NEWLY RESTRUCTURED FORM, RNGS PLANS TO FOCUS ITS BUSINESS DEVELOPMENT
EFFORTS ON THE FOLLOWING AREAS:

CIS
ptpt CONSTRUCTION: PROPOSALS TO CONSTRUCT NEW OIL AND nrg.g ptpt~ IN VARIOUS
PARTS OF THE CIS, PARTICULARLY xpt LINES, ARE PLENTIFUL. ptpt PROJECTS
TARGETED BY RNGS MANAGEMENT INCLUDE A MULTI-LINE SYSTEM CONNECTING THE

FOREIGN ptpt CONSTRUCTION: FORMER SOVIET CONSTRUCTION COMPANIES NOW UNDER THE RNGS
UMBRELLA HAVE BUILT nrg.p AND nrg.g FACILITIES IN OVER 20 foreign COUNTRIES,
INCLUDING GRM, BUL, GRKe, VTN, KWT, YEMEN, IRQ, AFG, ALG, LBY, NIGERIA,
LEBANON AND CUBA. OVER THE LAST 15 YEARS, RNGS UNITS HAVE CONSTRUCTED OVER
5,000km OF ptpt OVERSEAS

1994:RNGS CREATED A NEW SUBSIDIARY, ROSNEFTEGAZSTROY INTERNATIONAL {Rsn.bdg.crp},
TO IDENTIFY AND EXPLOIT ptpt bdg AND RELATED BUSINESS OPPORTUNITIES ABROAD.

-- ptpt REPAIR AND MAINTENANCE: RUSSIA'S VAST OIL AND GAS PIPELINE NETWORK HAS
SUFFERED GREATLY FROM A DEARTH OF REPAIR AND MAINTENANCE WORK IN RECENT
YEARS. RNGS OFFICIALS, CITING RUSSIAN GOVERNMENT AND INDUSTRY PROJECTIONS
THAT 1000s OF MILES OF OIL, GAS AND PROJECT PIPELINES PLUS UP TO 100 PUMPING
AND COMPRESSOR STATIONS WILL NEED TO BE RECONSTRUCTED IN THE COMING DECADE,
SEE A MAJOR MARKET NICHE FOR THE COMPANY AS A PROVIDER OF PIPELINE REPAIR
AND MAINTENANCE SERVICES.

--
CIVIL AND INDUSTRIAL CONSTRUCTION: IN AN EFFORT TO DIVERSIFY ITS CLIENT
BASE, RNGS HOPES TO BECOME A MAJOR GENERAL CONTRACTOR FOR CIVIL AND
INDUSTRIAL CONSTRUCTION AND RENOVATION PROJECTS. IN THE NEAR TERM, THE
COMPANY HOPES TO CAPITALIZE ON THE CURRENT UPSWING, ESPECIALLY IN MAJOR
CITIES SUCH AS MOSCOW, IN RENOVATION AND CONSTRUCTION OF OFFICE AND HOTEL
SPACE. ALREADY, RNGS HAS POSTED ONE SUCCESS BY SERVING AS THE GENERAL
CONTRACTOR OVERSEEING THE RECONSTRUCTION OF THE RUSSIAN PARLIAMENT BUILDING
(THE TRKISH FIRM ENCA ACTUALLY PERFORMED THE CONSTRUCTION WORK AS
SUBCONTRACTOR), WHICH HAD BEEN BADLY DAMAGED DURING THE RUSSIAN GOVERNMENT'S
ARMED DISSOLUTION OF PARLIAMENT IN OCTOBER 1994. [sic! 1993oc]

<>1997ap29:RTV|Turkey signed a landmark $13.5 billion dollar agreement with Russia's nrg.gas
giant Gazprom| The deal covers Russian gas deliveries to Turkey for the next 25 years. Turkey
now imports 6 billion cubic meters of Russian gas each year. Under the terms of the new deal, this
will increase gradually, reaching 30 billion cubic meters by the year 2010

<>1997ap:TRKey signed a $12.0b agreement to boost its mpt of Russian nrg.g (from
the current level of
212.0bcF/y
to
494.0bcF/y
in 2001

The gas
will be shipped through the existing ptpt, which will be expanded by two new
joint ventures which will invest $1.50b to add compressor stations and new
stretches of pipe to double the capacity.

Demand for
natural gas is projected to increase dramatically in Turkey over the next 10-15
years, with the prime consumers expected to be industry and power plants.
Several independent estimates see Turkey's consumption nearly tripling to
740bcF by the end of the decade, and
reaching
1400bcF by
2020.

Current gas
production in Turkey meets just 2.8% of its consumption requirements

The bulk of
Turkish gas demand is met by imports. Currently Turkey's main supplier of
natural gas is Russia, which assumed contractual responsibility from the former
Soviet Union for a ptpt running inside Turkey from the Bulgarian border up to
Ankara. Russia began supplying Turkey with
0200bcF.nrg.g/y through the ptpt

1997fe:Turkey reached an agreement with GRZ to receive RUS nrg.g via a ptpt
through its territory. The accord entails the
construction of a 19-mile (30-kilometer(km)) ptpt extension to the Turkish
border, with initial shipments of
0106bcF/y

Expand &
rehabilite GRZ ptpt & increase capacity to
0318bcF/y

RUS also
agreed to increase xpt to TRK to
1060bcF by
the year 2010

1997ja:RUS
Gzz.crp
announced that its board of directors had approved new xpt ptpt-TRK. The
$2.50b, 750-mile (1,200-km) ptpt would run from Izobilnoye in southern Russia,
to Dzhugba on the Black Sea, then under the Black Sea to the Turkish port of
Samsun, and then to Ankara. When completed the line would be the world's deepest
underwater gas ptpt. The high cost and complex engineering could push Russia to
choose alternate routes (parallel to the current ptpt through Bulgaria or
through Armenia).

Turkey has
also looked to other sources to increase and diversify its gas supplies

1996fe:TRK
& TKM prx~ signed a memorandum of understanding (MOU) which calls for TKM gas
exports to Turkey beginning in 1998 at about
0070bcF/y,
and reaching
0530bcF by
2020

TRK also
plans to sign an agreement to import IRQ nrg.g.

IRQ Oil
Minister, Amir Muhammed Rashid, said that an agreement to supply Turkey with
0350bcF.nrg.g over a 10 year period will be signed in 1997jy

The two
countries will jointly build a 185-mile(300-km) ptpt needed for the supplies.
Turkey's most controversial import scheme is the $20b, 22-year deal with IRN.
Initial deliveries of
0105bcF/y
nrg.g 1999:scheduled to bgn, reaching
0350bcF by
2005

The supply
contract will require construction of three new ptpt~
in Turkey. The local consortium of Fernas and STFA Enerkom won the bid to
construct the 46-inch 160-mile (260-km) line frm Dogubeyazit, on IRN border, to
Erzurum.

1997ap:Botas, the state-owned ptpt company, requested bids on a 252-mile
(403-km) link between Erzurum and Sivas as well as a connecting 288-mile
(461-km) ptpt between Sivas and Ankara. This deal has brought criticism from
USA, which views the deal as supporting the current IRN regime, and as a
possible violation of the Oil Sanctions Act.

LNG

Turkey also
plans to utilize imports of liquefied natural gas (LNG) to help meet demand
requirements

1994:TRK
began receiving
0070bcF LNG
from Algeria at the terminal at Ereglisi
on the
Marmara Sea. The shipment was part of a twenty-year deal reached with Algeria in
the mid-1980s. In 1995 capacity at the terminal was increased to
0105bcF/y

The
terminal has also received spot-shipments of LNG from Australia. Turkey has also
signed MOUs with Nigeria,

Qatar, and
Yemen to receive supplies of LNG

1999:Nigeria will ship
0032bcF/y
LNG

1999:Qatar
will supply
0070bcF/y
for 25-years

2001:Yemen's 25-year deal calls for exports of nearly
0090bcF/y
LNG

?when?:Oman
also considering shipments

New LNG
terminals are also being planned. Plans call for a new terminal adjacent to the
existing Ereglisi facility, a second at Aliaga, near Izmir on the Aegean Sea,
and a third at Iskenderun on the Mediterranean

1996no:TRK-Egypt signed agreement re.Izmir facility, a $4.0b MOU. The ambitious
agreement calls for exports of nearly
0350bcF LNG
from fields offshore the Nile Delta. First deliveries of LNG are expected to
commence in 2000.

Multipolarity has become the predominant trend of the times. The fourth joint
statement signed during President Jiang's visit listed the common understandings
reached between CHNa and Russia on the current international situation. In
particular, it stated that CHNa and Russia, as two separate poles in the world,
follow an independent foreign policy and oppose a single-polar world. Under the
current international circumstances, forging a long-term and stable strategic
partnership between CHNa and Russia will promote the development of a
multi-polar world order, effectively check hegemonism and power politics and
contribute to the establishment of a new international political and economic
order that meets the expectations of the majority of nations.

Last
year, CHNa signed an agreement with Russia, KZXan, Kyrgiz [>KYR] and TDJ on
confidence-building in the military field. The five heads of state signed
another agreement in Moscow this time on mutual reductions of military
forces in the border areas. This represents a major achievement made by the
five nations in bringing peace and prosperity to their border areas. The
agreement will not only help preserve security and stability in those areas
but will also be of major significance to the development of long-term,
friendly relations between CHNa and its neighbors. Together, these two
documents, the only such agreements in the Asia-Pacific region, will play a
positive role in enhancing friendship, building confidence and maintaining
peace in the Asia-Pacific region and the world at large. They stand for a
new concept of security in the post-Cold War era.

<>1997my15:AFG instability cautions
Uno.crp.nrg| There may be little end in sight to
fighting in AFG, but US Uno.crp.nrg, planning to build a
$2.0b nrg.g
ptpt across the war-ravaged country, is for now prepared to wait it out. "It's a
waiting game," John Imle, Uno.crp.nrg's president, told. "We've been disappointed that
AFGistan remains a country of turmoil." But Imle said Uno.crp.nrg was for the moment
prepared to sit and wait. "There are a lot of gas and oil rzv~ to back both
these ptpt systems. It'll be a good deal on a stand-alone basis," he said.

Uno.crp.nrg, with
SaA's Delta Oil, aims to build the
1,500km
(1,000m) nrg.g ptpt from the TKMen-AFG border to N.PAK Multan. There is also an
option to extend the ptpt to N.INDia. The gas would come from the huge
Dauletabad nrg.g.ggr in SE.TKMan, and over half the route would be located on
AFG territory. Imle said Dauletabad had 30 years supply to pipe
0020.0bcM/y
(?) to S.ASA mkt~.

UZB prx
Islam Karimov, speaking at a regional summit in TKMistan, said the AFG wrx
threatened continued isolation from wrl.mkt for the clutch of ex-Soviet Central
Asian states. "If the war continues in AFG, not one project here means
anything," Karimov said.

Observers
are taking the project more seriously now that the purist ISLamic Taliban
militia [in AFG] have placed three quarters of the country under its control.
Crucial to the project, say observers, is a recognised government which
Uno.crp.nrg and
other energy firms can deal with.

[CF:
1997sp:REECAS NEWSLETTER|Lumpkin,Jeff (2nd yr grad stud at UW)|"At
Play in the Oil Fields of Central Asia"|Mentioned Uno.crp.nrg "on of the most
fascinating ptpt proposals": TKM Charjou via AFG to PAK Karach|Lumpkin rpt-
conversations w/Uno.crp.nrg apx at vst where he worked:
Taliban and wrx in AFG is no problem, "we’ve got deals with all the
warlords. [...] they’re very reasonable when it comes to money". (2)
Chris Taggart, Uno.crp.nrg vprx was quoted in 1996oc29:Trud:4,
rtl "Neft’ paxnet krov’yu" sd "Esli Taliby stabiliziruyut obstanovky i poluqat
mejdunarodnoe priznanie, to perspektivy stroitel’stva truboprovodov znaqitel’no
uluqwatsya." [NEWSLETTER dates this in 1997oc, but that must be a typo like so
much else typographically irregular about the citation] USA denies any role in
AFG events, but admits talks w/Taliban leaders.
1996oc11:Delovaya nedelya#39,
n217:9|Kenesov,Berik rpt- "Nado otmetit’,qto nameqayuwwayasya napryajennost’ na
severnoi granice Afganistana v interesax nekotoryx gosudarstv na zapade"]

The ptpt
project was born of what Imle said is landlocked Central Asia's transport
bottleneck, with the clutch of ex-Soviet states reliant on existing Soviet-era
ptpt~ controlled by Russia. "Transportation is the issue," said Imle. "There is
plenty of oil and gas but we decided to enter Central Asia with a transport
project," he said. An oil ptpt is also planned to follow the gas ptpt route,
with xpt capacity to the Arabian Sea pencilled in at
1.0mB/d

Imle said
Uno.crp.nrg would aim the ptpt at Kazakhstan, with vast oil rzv~ in the west of the
former Soviet republic, and even Russian producers in western SBR. "Sweet crude
landing on the NDN.O is a dollar or two higher than Urals blend landing in the
Black Sea," Imle said. He said Uno.crp.nrg was already active in finding and
establishing a market for the gas in Pakistan, particularly in power generation.
As well as ongoing political uncertainty in AFGan, Uno.crp.nrg faces a battle with
another company for rights to the ptpt project -- Argentinean independent Bridas
Energy Corp. Bridas is suing Uno.crp.nrg for what it called "tortuous interference" in
a plan Bridas developed to xpt TKM nrg.g to PAKan via AFGan

1997no:USA
court hearings are pencilled in

It is also
unclear how a memorandum signed recently between the Presidents of TKMan, IRN
and TRK to transport gas from the Dauletabad field to TRK via IRN would
affect the Uno.crp.nrg plan.

Initial
throughput in the line, which is tied into GRMy-based Wintershall's older ptpt~,
was
0.058bcF/d

Eventually
in 2010, Yamal shipments to Europe are expected to reach more than
5.50bcF/d

The cost of
the ptpt could reach $40b.

1997fe28:Additional financing for the project was received on February 28, 1997
when Gzz.crp
agreed to the terms of an 8-year,

$2.50b
syndicated loan from [bnk.snd] 19 international banks to be backed by revenues
from Gazprom's gas exports to Europe; Wintershall has also provided credits for
the project.

Russian gas
exports were equal to about 30% of its natural gas production.

Of this
amount, about 67% are destined for European markets and the remainder for CIS
countries.

Western
Europe relies on Russian gas to meet about 25% of its consumption needs.

Even though
shipments by Gzz.crp
to CIS countries are relatively small and are partially
subsidized, a few countries,
EG:UKR BRUS & MOL, have amassed large arrears since 1993

1996:Gzz.crp
estimated that it was owed the equivalent of $10 billion by CIS countries for
past gas deliveries to both Russian and CIS customers. Over 90% of Russian gas
exports to Europe run through UKR & CZC . However, YAM-EUR.ptpt will by-pass UKR

1996de:EBRD
approved a $225.0m loan as part of a $300m investment program geared towards
rehabilitating Gzz.crp
's ptpt network.

1997fe:YlcB
adjusted 96oc:dkr. Differentiated gas prices by very broad ggr rgn~ in order to
reflect tpt costs (the
maximum differential between regions is 10%)

1997ap28:YlcB decree ordered sweeping reforms in the country's natural gas
sector under which the gvt
retained its 40-percent equity stake in Gzz.crp
indefinitely and strengthened
Gzz.crp
's international position and boosted its share price. Gzz.crp
will lose its
monopoly right to develop new gas deposits (which instead will be allocated at
tenders open to competitors), will offer equal access and competitive rates on
its national ptpt network to all producers (giving oil and other companies the
opportunity to compete in the gas business), and will be required to ensure
transparency of its finances with detailed annual financial reports. Additional
decrees were signed on May 13 and May 28 by President Yeltsin substantially
increasing the state's role in managing Gzz.crp
.

1997ap:RUS
& IRN signed an agreement on cooperation in the oil and gas industries whereby
Gzz.crp
wld invest directly in joint operations in development of IRNan nrg.g.ggr,
production
capacity,
refining,
liquidation, and
tpt of
natural gas and associated extraction industries in the PER.G and other areas

1997je:RUS
& CHNa signed agreements to create a joint venture for nrg.g exploration in SBR
that is expected to result in xpt of almost
1.0tcF/y to
CHNa

<>1997je:KZXan awarded Tractabel (BELgium) a 15-year contract to manage its
natural gas network. Tractabel has pledged to spend $600m on investment, repair,
construction, and planning costs, as well as $100m to build a ptpt in southern
Kazakhstan to bypass Kyrgyzstan . Other investment needs include capturing
previously flared gas, field processing of natural gas, developing projects that
support swap agreements with neighboring states, appraisal work for gas fields
located near consuming areas, meter installation at cross-border locations, and
environmental rehabilitation and protection.

Kazakhstan
contains about
83.0tcF
nrg.g, and more than 40% of these are located in the giant Knrg.g.ggr (northwest
Kazakhstan), which is an extension of Russia's Orenburg field.

1997, an
international consortium signed a
$7.0 - $8.0b final production sharing agreement to develop the Knrg.g.ggr for 40
years:
Agip
(32.5%, Italy)
BG (32.5%,
U.K.)
Tex.crp.nrg (20%,
United States)
Luk.crp.nrg (15%,
Russia)

Although
the Knrg.g.ggr produced 0.050mB/d nrg.p & 67.0bcF nrg.g in 1996 (almost half of
the country's total production of natural gas), production was only half of what
had been planned, and is far below the field's potential production of 0.20mB/d
nrg.p and condensates & 700 - 900bcF/y nrg.g. Development of the field has been
hampered because the former Soviet Union intended for all gas to be processed at
the nearby Orenburg nrg.g.zvd, and xpt- via ptpt from Russia.

Gzz.crp
originally agreed to take a 15% stake in the consortium in exchange for
processing and exporting the gas, it has been unable to reach agreement on the
terms of the deal with its partners, and has left the project. Although a
workable deal with Gzz.crp
remains the best option for Knrg.g.ggr's development,
President Nazerbayev has asked consortium members to develop interim solutions
to process and dispose of the gas, as there is no large gas ptpt available
outside the Russian system to export the gas.

Fields
other than Knrg.g.ggr do not have access to xpt ptpt at all. Kazakhstan's other
significant producing areas are the TGZ and Zhanazhol nrg.g.ggr, with the Uritau
field expected to eventually become the third largest producing field. The
undeveloped offshore areas are also believed to hold large amounts of gas.

These
nrg.g.ggr are near the Russian gas ptpt system byt are not currently linked to
it Furthermore, the Russian ptpt system may be insufficient. Either the existing
Russian gas ptpt system must be expanded, or Kazakhstan will need to develop new
routes, EG:the proposed $12.0b, 3800m ptpt that would bring C.ASA nrg.g to CHNa
In addition, the mostly sour Kazakh gas will require that additional
gasprocessing equipment be built.

In general,
the Kazakh gas sector faces a lack of infrastructure, especially ptpt~. Gas
producing areas in the west of the country are not connected to consuming areas
such as the populous southeast and industrial north and, as a result, Kazakhstan
has two separate gas ptpt networks.

Kazakhstan
exported its gas production from the west to Russia, and imported three-fourths
of its natural gas consumption needs in 1996 from TKMistan , Russia, and
Uzbekistan . Kazakgaz was responsible for distribution in the west, while
Alaugaz had been responsible for distribution in the southeast.

Growth in
industrial and commercial sectors together with rise in population has led to
increase in nrg demands. With the inadequacy of domestically available nrg
supply, government has had to increase spending on imports of {nrg.p} crude oil
and oil products. Major imports are from IRN, Qatar, Oman and Russia. India is
flanked by nrg.g rich nations with xptable surpluses, and it needs to be
examined how best to tpt the nrg.g economically and efficiently to India.
Parallelly, the government is intensively promoting exploration of natural nrg.g
in India, inviting both foreign and local firms to participate. However, flaring
of natural nrg.g continued during 1994-95, at about 11.6% of the total
production. Flaring of natural nrg.g takes place due to lack of :
required compression and tptation
facilities,
technical requirements of
operational safety,
availability of nrg.g from
isolated pools which cannot be economically connected to the
tpt network and
non-lifting of nrg.g by consumers
etc.

The
production of nrg.g in 1994-95 at 19.40bcM , was higher by 5.7% than 1993-94.
Today, the lack of power, finance and expertise is compelling the government to
seek more power generation projects. Nearly 70 power projects will be in
operation by the year 1997. One third of these are based on gas. Natural nrg.g
accounts for 10% of the primary nrg demand in India. Gas use has mainly
developed in the NE due to the 1980s commissioning of the
Hazira-Bijapur-Jagdishpur (HBJ) ptpt that links Bombay High in the south-west to
consumer centers in the North. Along the route, fertilizer plants and combined
cycle power plants have come up.

In India
80% of nrg.g is utilized in fertilizer and power sectors. The other uses of
natural nrg.g are in LPG, furnace oil and sponge iron. Presently, larger volumes
of nrg.g are used to produce fertilizer-a sector where nrg.g use is considered
most efficient as against power sector.

With
government inviting independent power producers, the demand for nrg.g for the
gas-fired combined cycle power plants will increase, thereby, affecting the
supplies to the fertilizer sector. However, by the year 2000, demand for
fertilizer is expected to be met through dedicated offshore plants and power
generation is expected to account for 29% of nrg.g use, rising to 36% by 2005.

The
total nrg.g availability in India today:
1400
MMCFD [?mcF/d?], which is likely to reach
2100
MMCFD in 2000 and
3000
MMCFD in 2010

The
projected gap between demand and domestic production:
3000
MMCFD in 2000
5600
MMCFD in 2010

<>1997je:DENMARK [>DNM]
Copenhagen|20th World Gas Conference|>Viakhirev,RI, Chairman of the Board, Gasprom, Russia. [Gzz.crp
], delivered
keynote address, "THE PERSPECTIVES OF RUSSIAN NATURAL GAS: ROLE AT THE WORLD GAS MARKET"
[TXT]

THE
PERSPECTIVES OF RUSSIAN NATURAL GAS: ROLE AT THE WORLD GAS MARKET
Keynote speech by
R. I.
VYAKHIREV [Viakhirev], Chairman of the Board, Gasprom, Russia. [Gzz.crp
]
[SOURCE]

SUMMARY=

Present state of things in nrg.g industry of Russia and perspectives for further
development of nrg.g industry in Russia are considered in line with the world
nrg industry. Estimation of perspectives for both the existing and new markets
for the Russian nrg.g is given. The main attention is paid to the problems of
developing the Russian home natural nrg.g market. It is shown that a powerful
raw material potential makes it possible to consider nrg.g industry as a support
for developing fuel-and-nrg complex of Russia in a long-term perspective.

Any attempts at forecasting the development of world nrg production, at setting a
rational scope of energy supply or at early preparation of structural, organizational and engineering
decisions in the fuel and energy complex should respond adequately the challenge of current issues
confronting society. For the coming 20 or 30 years, the major concerns might be:
the ever-growing nsx;
the ever-degrading global enx [wrl; tntn];
the enhancement of the nrg use efficiency and
the emergence of new energy sources and
[the emergence of new] production processes.

[EEE=] Building steadily sustainable development future energy production, we should take into
account these diversely-oriented tendencies and meet the demands of the
efficiency and safety in energy production, economy and the environment.
Inasmuch as the basic population growth within the whole comprehensible
perspective would belong to the developing countries, a cardinal and strategic
problem of humanity would be to supply them with energy and bridge the gap
between their energy supply and that of the developed countries.

Analyzing the evolution of energy production over a greater and trying to define the role
of natural nrg.g in it, one should take into account the following features of the energy framework in the world:

the principal modern nrg consumers, i.e. the industrially developed countries, [will continue as such]

[they will enjoy] a stable and [slightly declining] level of energy use, which is primarily due to

nrg-saving policy and

structural transformations in [their ekn~]

new locations and centers of fast-growing energy use are going to emerge: those will be primarily

India are going to become major energy consumers within the [next 10y];

a geographical [distances between points of] production and consumption of energy
will be retained, but

extensive development of off-shore rzv~ [will ease that problem, as will],

progress in nrg.n production and the

advance in new energy sources and

[advance in new]methods of energy production;

the role of nrg.g in the world energy supply is potentially enormous (Fig. 1), considering

its rzv~ and

favorable environmental properties

[But] the implementation of the potential [will be in competition] with other kinds of
fuel and energy:

essentially, with oil and nrg.c,

in future with nrg.c and nrg.n produced by safe reactors, and

later with {nrg.s nrg.z nrg.g} renewable energy sources.

Fig. 1. Structure of the world energy resources, %.

The gist of the competition will be in the customer's choice of preferable energy source
on the basis of its consumer properties and price. And while the consumer properties of
nrg.g will be basically advantageous as compared with other energy sources, its position
in price competition will depend on the potential resolution of a number of fundamental
technological and economic issues [in re. competitive price position of nrg.g]

The following ones among these should be regarded as top priority:

cost reduction in production and tpt of gas;

technological advance in traditional domains of nrg.g use,

[?technological advance] in energy production in the first place;

development of new sectors of nrg.g use

(compressed and

liquefied natural nrg.g

for tpt,

air conditioning,

methanol production,

etc.)

Fundamentally novel and reasonably effective technologies should be devised in
order to be able to produce from the conventional nrg.g rzv~ that are going
to be associated with the prospects of nrg.g industry for 2030-2050 (coalbed
methane, tight nrg.g sands, deep gas, nrg.g hydrates rzv~). Fundamental
studies and pilot projects along these lines are under way in many countries,
and Russia is no exception in that respect. Numerous studies performed by
international organizations and national teams of researchers, including those
of Russia, make it clear that although energy saving is both essential and
significant, further increase in world energy consumption and therefore further
rise in energy production are unavoidable, at least for the next 25-30 years.
This inference is in complete accordance with the maturing tendency of reducing
the gap between the living conditions of population in the developing and
developed countries, which is a target for humanity to aim at.

A consistent augmentation of the share of nrg.g in the world energy balance is a
longterm tendency. There is every reason to assume that in the foreseeable
future the tendency can persevere (Fig. 2). Whether or not nrg.g is going to
play the leading role in the structure of world production of primary energy
resources will depend not only on the results of its competition with other
energy sources but also to a certain extent on the endeavors of the
International Gas Union in the development and expansion of nrg.g markets.

Fig.2. World natural nrg.g demand forecast, BCM.

The Russian nrg.g sector, possessing world largest rzv~ of natural nrg.g that can be
ptpt- through the well-developed Unified Gas Supply System [Uno.crp.nrg.g.ptpt]
connecting Russia with the CIS and European countries and therefore being
geopolitically very significant for the Eurasian region (Fig. 3), is objectively
called for rendering a thorough strategic impact on the evolution of
international energy relations at the turn of the 20th century. In order to
support the idea, we can only cite that the Russian
nrg.g rzv~ amount to 38% of the world ones while Russia produces 27% of the
world gas.

Fig.3. Structure of fuel-and-energy balance of Russia, %.

2. Evaluation of Prospects for the Existing and New Markets for Russian Gas

At the present time, international nrg.g markets are clearly regional. Three major markets...:
Europe
North America
East Asia

In our opinion, each of them has got a fine potential for its further progress,
especially the East-Asian market.

Another two regional markets...
South America
South Asia,
are shaping up. Internationalization of the world economic relations and further scientific
and engineering progress concerning nrg.g tpt over very long distances appear to
bring about gradual merging between a number of regional nrg.g markets,
especially in
Eurasia, where in the course of time the world[‘s] largest [nrg.g market] network ...
might take shape.

The Eurasian geopolitical position of Russia gives us a chance to structure our
operation with due regard of the unfolding situations at the nrg.g markets both of the

European Community and of the
Asian countries.

These two nrg.g markets, being well-connected with the Russian nrg.g industry, are at
totally different stages, and therefore the nature of their further progress is
going to be essentially unlike one another.

Russia is one of the most important players at the European nrg.g market. The other
regional nrg.g markets are at a considerable distance from the main producing
sites of RAO Gzz.crp
, which is a material reason that lessens the chance for the
presence of Russian nrg.g at those markets. Nevertheless it can be assumed that
in future Russia will play a great role at the Asian nrg.g markets as well,
which is related to nrg.g xpt from the nrg.g.ggr in East SBR and Russian Far
East to People's Republic of CHNa, Republic of KOR and JPN, as well as to the
direct participation of Russia in the development of nrg.g rzv~ in the
countries of Central Asia and in projects for nrg.g tptation from that region to
Pakistan, India, People's Republic of CHNa and other Asian states.

While the Russian Arctic off-shore nrg.g.ggr are being put into operation, that creates
the ground for deliveries of liquefied natural nrg.g to the North-American and
South-American markets.

A civilized method of redistributing energy sources between countries is a real achievement
of the 20th century. There is every good reason to believe that during the
coming decades the volumes of global energy flows [tntn or wrl.nrg] will become
even greater, and local and regional energy markets will grow to become
transcontinental. In consequence, humanity will have a better and more reliable
system of energy supply. And natural nrg.g should play its weighty role. In
order to achieve that, not only both economic and engineering problems should be
overcome. There is also a need in the expedient transformations of the principal
characters playing at the nrg.g markets, i.e. the nrg.g companies themselves,
and a certain correction of the basic rules of behavior at the markets. One can
observe some dramatic changes at the European nrg.g market. The competition
struggle among the major natural nrg.g xpters has aggravated in connection with
the processes of liberalization at the European nrg.g market, where there is a
clear-cut tendency of the supply exceeding the demand, at least in the
short-term and medium-term perspective. Gas industry as a part of the market
economy is a very specific sector for which many of the standard approaches are
hardly acceptable. Modern comprehension of its status in most countries either
has taken shape during the past 10-15 years or has been debated severely until
now. The latter is typical for the European nrg.g market as well. We regard the
improvement of the nrg.g market rules as matched with the implementation of the
European Energy Charter and the associated agreements. The European Community
{EEC EUn stt.vs-mkt} countries adhere to a uniform policy of energy security, in
accordance with which there is a certain allotment of energy supply set over the
suppliers, over the energy sources and over the kinds of generating capacities.
The Russian nrg.g sector takes that into account while dealing with the European
nrg.g market countries. At the same time we believe that setting an upper
potential limit for a supplier should be substantially dependent upon the
supplier's reliability and nrg.g industry resources. In the European countries,
there is still no uniform model for the structure and operation of the nrg.g
sector. Discussions concerning the extent and patterns of nrg.g market
liberalization have been going on for many years there.

The points of liberalizing the nrg.g sector are related to the need in involving major
financial funds for modern nrg.g tpt systems. The return of the funds is
commonly guaranteed by the significant nrg.g rzv~ on the one hand and by
prior agreements with customers for deliveries.

All that is easier to secure by major integrated companies oftentimes backed by
governments than by a would-be consortium of small commercial structures.

[stt&ekn=] Gas projects have always made it imperative for government authorities to
be involved in decision-making, because they needed long-term guarantees that
were indispensable both for the deliverers and for the customers. Since projects
become more sophisticated and costlier, that situation is going to be ever more
pressing and, moreover, new forms of intergovernmental relations might be needed
to accomplish major transcontinental nrg.g projects. For instance, one of the
problems is related to the nrg.g transit tptation rates that might have a
crucial impact on transcontinental nrg.g flows. To date the rates are so high
that natural nrg.g in Europe may prove to be non-competitive as compared with
other fuels. One of the practicable ways to eliminate the danger is to work out
jointly a mechanism envisaging a chance for a redistribution of profit between
nrg.g suppliers and customers. All of these aspects have to be summarized and
pondered upon before taking any final decision. In any case, however, regulation
of the Russian nrg.g market is going to advance along the same lines as in the
EUn. In the development of the Russian nrg.g market, due consideration is given
to the experience of the European countries.

RAO Gzz.crp
has got significantly greater degrees of freedom
in the choice of nrg.g markets than during the period of the former Soviet Union.

Currently
66% of
nrg.g produced in Russia is consumed by the domestic market,
20% is xpt-
to the countries of Central, South-East and West Europe and
14% is
xpted to the CIS and Baltic countries (Fig. 4).

Fig.4.
Natural nrg.g of Russia. Trends of usage in 1996, %.

Most of the
nrg.g (95%) produced and delivered domestically and for xpt is supplied by RAO
Gzz.crp
or by its subsidiaries. The Russian internal market is very capacious, and
it is still going to expand intensely with the stabilization and elaboration of
the economy, the internal prices for natural nrg.g being such that Gzz.crp
's income
from nrg.g sales in Russia will be no less than from the sales at foreign
markets.

l995:Domestic delivery of nrg.g =
340bcM

nrg
production and other energy-consuming sectors prevailed in the structure of
nrg.g consumption, and the share of municipal and household supply was less than
20% (Fig.5).

Fig.5.
Structure of domestic demand for nrg.g in Russia, BCM.

The high
share of power plants in the nrg.g consumption structure can be accounted for by
the purpose-oriented governmental policy of nrg.g replacing both nrg.c and
{nrg.p} fuel oil, aiming at making the air enx sounder and oil fuels available.
That strategy will be retained in future, especially in environmentally
unfavorable areas.

2010:Planned nrg.g utilization
365.0-370.0bcM [?] of natural nrg.g for power and heat generation, of which
approximately
205.0bcM for power production only.

Along with the increase of sales of gas, RAO Gzz.crp
intends to launch construction of
CCPP (combined cycle power plants)
in
nrg-deficient areas, the plants being equipped with nrg.g turbines of small and
medium unit capacity. Therefore an important step will be made towards an
expansion of RAO Gzz.crp
in the business space and towards further promotion of the
competitive energy production market in Russia.

One of the
priority objectives held by RAO Gzz.crp
is the further progress of nrg.g
distribution network {tpt}, primarily in {gbx vlg} rural and small town areas.
In the past, when the basic emphasis in the nrg.g sector was on {tpt} large
streams of nrg.g targeted at major customers, network supply to small cities and
villages, especially the ones remote from trunk ptpt~, was not given any
sufficient attention. The result is that millions of Russian citizens have been
unable so far to enjoy the advantages of nrg.g fuel. We are taking measures to
correct the current situation. As far as that is concerned, top priority areas
are:
North-European part of Russia
South-West
SBR
Volga area
Black Soil
area
In
particular, it is planned to construct nrg.g ptpt~ to supply nrg.g to the cities
of
ARX and
Severodvinsk, as well as to the
Murmansk Region and
Altai
Territory.

Alongside
with the construction of new trunk and distribution nrg.g ptpt~, the plan is to
advance intensely the medium and low pressure nrg.g networks. RAO Gzz.crp
is going
to be heavily engaged in that. Due to further progress of nrg.g networking and
increased provision of housing for the population, an elevated employment of
nrg.g for the household and municipal supply is expected.

Estimates
reveal that the need in nrg.g for grd and dms needs will increase in 2010 by
about 90bcM.

In our
opinion, there is every prerequisite needed for an essential broadening of the
scope of utilization of natural nrg.g as {nrg.m} motor fuel in Russia. An
objective has been set for 2005 to bring the volume of nrg.g used for that
purpose to 15.0bcM, which would allow us to cut down the discharge of hazardous
substances into the atmosphere by nearly 3.0bcM/y. The last point is very
important for big cities.

Forecasts
give us grounds to believe that internal nrg.g consumption in Russia is going to
rise and, depending on the rate of economic growth and success of vigorous
energy-saving policy, reach 35-40% by 2010 as compared with 1995.

Unlike most
of the countries, there are practically no long-term contracts for nrg.g
deliveries to the internal market in Russia. That removes a number of problems
that occurred while the nrg.g market was liberalized in those countries and
makes it easier to bring about new forms of its regulation in principle. The
processes related to nrg.g market regulation in Russia advance along the same
lines as in the European countries. The structure and methods of operation at
RAO Gzz.crp
and other Russian gas-supplying companies are subject to change
accordingly. Relatively recently, a specialized subsidiary company was set up
within RAO Gzz.crp
to carry out marketing and sales operations at the domestic
market; it has to perform centralized payment settlement with nrg.g consumers.
The subsidiary purchases nrg.g from gas-producing enterprises, including those
beyond RAO Gzz.crp
, and pays for the services of nrg.g tpting companies of the
Society for
Gas Transportation over the
Russian
Unified Gas Supply System (UGSS).

According
to Russian law, nrg.g exploration and production must be carried out in
compliance with licenses that are granted on a competition basis. Along with
Gzz.crp
, some other companies have got those licenses as well.

tptation of
nrg.g over the Russian UGSS has been recognized as a natural monopoly. In
consequence, the government is going to regulate the tariffs for nrg.g tptation
over the UGSS rather than prices for gas. At the same time, independent nrg.g
producers shall enjoy the right of access to the nrg.g tptation network
belonging to RAO Gzz.crp
. That creates the prerequisites necessary to preserve
intact the existing nrg.g tptation system, which is of paramount importance in
providing high level of reliability in the supply of nrg.g to customers. In the
long run, all these measures will make it possible both to liberalize the
Russian nrg.g market and to reduce production costs in RAO Gzz.crp
, therefore
improving its competitiveness at both the internal and external markets.

((leaks;wastage ecx)) One should
underscore the significance of employing the existing potential of energy-saving
in Russia; estimates reveal that it amounts to 40-45% of the total volume of
energy consumption to date. It goes without saying that there are
considerable rzv~ in saving natural nrg.g along the entire technological
chain from its production point to the end user.

The
potential of nrg.g saving can be estimated at 100-110bcM, which amounts to 1/4
of the total nrg.g consumption in the country.

The
involvement of the gas-saving rzv~ will allow us to be more conservative in
the rate of development of new nrg.g.ggr, while meeting the internal nrg.g
demand in full, and will give us a chance to have additional resources for xpt.

The
extensive natural nrg.g rzv~ in place and the concentration of rzv~ in
major nrg.g.ggr make it possible to regard the nrg.g sector as the backbone of
further progress of the fuel and energy complex in Russia in a long-temm
perspective.

During the nearest 15-20 years, the markets of the European countries, including the
European CIS and Baltic countries (that turned from being our internal markets
into external ones in the process of well-known transformations), will stay
being the most important and predictable Russian xpt markets.

5.1 The CIS and Baltic Gas Markets

Russian nrg.g is practically the primary nrg.g supply source for the Ukraine, Belarus
and Moldova, as well as for the Baltic countries. As to the Caucasian CIS
countries, nrg.g is supplied there due to redistribution of TKMian gas. This
situation is going to be the same during the years ahead. The largest Russian
nrg.g importers at the CIS markets are the Ukraine and Belarus (Fig. 6). Russian
nrg.g is supplied to those countries, as well as to Moldova and the Baltic
states, through the Unified Gas Supply System constructed earlier in the USSR.
We believe that the current level of nrg.g supply to the CIS and Baltic
countries will be rising while they are going to overcome gradually their
economic crisis. RAO Gzz.crp
estimates show that the nrg.g market there may
increase for Russian nrg.g by 10-15 BCM in the year 2000 and by 20-25 BCM in 2010.

Fig.6. xpt of nrg.g from Russia to the CIS and Baltic countries in 1996, BCM.

Apart from supply of natural nrg.g to the CIS and Baltic countries, cooperation with them
is carried out by setting up mutually beneficial joint ventures and
international joint-stock companies, by joint employment of labor and logistical
resources while constructing industrial facilities, socially-oriented units and
the infrastructure of the gas-supply system, including, in particular,
underground nrg.g storages.

5.2 The Gas Market of Central, West and South-East Europe

Russia has been supplying natural nrg.g to the European countries for over 25 years (Fig. 7).

Fig.7. xpt of nrg.g from Russia beyond the borders of the CIS and Baltic countries in 1996, BCM.

In the early l990s, the market for Russian nrg.g in the countries of Central and East
Europe dropped somewhat because of the economic recession. During the recent
years, nrg.g consumption has started to grow. In our opinion, while those
countries are going to overcome the recession, their demand for imported gas,
despite the intended measures for reduction of the energy intensity of the gross
domestic product, may increase by 30-40 BCM by 2010 as compared with 1995. To
date, the source of nrg.g supply to the West-European states is their own nrg.g
production. The existing nrg.g shortage is covered by the import from Russia and
Algeria. This tendency will be retained in future. We are aware of the fact that
nrg.g from Middle East may start competing with Russian nrg.g in the region
within the next 1 0- 15 years. Nevertheless, RAO Gzz.crp
expects the Russian nrg.g
to win the competition so that its supply to that market will expand.

Construction of the Yamal-Europe system of trunk ptpt~ has been started
precisely in order to support the planned growth of xpt deliveries of Russian
nrg.g to Europe and to raise their reliability and flexibility. Implementation
of the Yamal-Europe project has been scheduled in such a way that there would be
a chance to respond in the most flexible and economically efficient manner to
the possible shifts in the nrg.g market both in Russia and in other countries.
Construction of the South-European transit ptpt envisages increasing the growth
and reliability of Russian natural nrg.g deliveries to Italy and of additional
deliveries to Hungary, Slovenia and Croatia.

Reconstruction of the existing transit nrg.g tptation capacities and
construction of new ones are envisaged in ROM, BUL, TRKey, GRKe and a number of
other countries in order to cover the demand for Russian nrg.g in the South-East
Europe (including Turkey). According to endorsed intergovernmental agreements,
the overall nrg.g delivery to the region will increase from
19.50bcM in 1995 to
58.00bcM in 2010.

The objective of the North-European project that is currently under consideration is
to provide nrg.g supply to the North-European states by tpting it from Russia to
West Europe via Finland, Sweden and Denmark. Measures will be taken to plan,
finance and construct the North-European ptpt if that proves to be economically
feasible.

The scale of natural nrg.g xpt from Russia to Europe will be influenced by the following factors:
competition between nrg.g and oil products, as well as other energy sources;
competition between various nrg.g suppliers.

Both kinds of competition for the Russian nrg.g to overcome will be determined by the
prices for energy sources. We expect that Russian gas, in terms of pricing and
delivery reliability, will turn to be better for the European customers than
nrg.g from other regions of the world (i.e. IRNian, Middle-East and Nigerian
liquefied gas). In any case, we are ready for such competition.

During the latest years, RAO Gzz.crp
has extended significantly its activities abroad in nrg.g
construction, primarily for tptation of natural gas. RAO Gzz.crp
takes part in
implementation of a number of major nrg.g energy projects in the CIS and
European countries and in the establishment of joint ventures (including those
in Poland, Germany, Italy and other countries). Implementation of those
projects, along with the expected good commercial results, will allow us to
strengthen our business cooperation and improve the political climate in the European continent.

Casting a glance beyond the year 2020, we can expect the establishment of new markets,
including those for Russian gas. Primarily, this is related to the expected
growth of demand for nrg.g in Spain, Portugal, Greece and some other
West-European countries. At the same time, the growth of expenditures for the
development of new nrg.g.ggr in remote and not easily accessible areas, as well
as high nrg.g tptation tariffs cause RAO Gzz.crp
to be prudent in dealing with the
development of new markets and with increased nrg.g deliveries. That is why the
decision concerning each project will be taken on the basis of its economic
efficiency. We intend to develop cooperation with any partners only if there is
reciprocal interest and mutual benefit.

The demand for nrg.g in the East-Asian countries (principally in JPN, Republic of KOR and
in the CHNese People's Republic) is due above all to the environmental reasons,
in particular, due to their need to increase their energy consumption without
further technogenic impact on the environment.

Gas markets in East-Asian countries have not yet been developed, which can be accounted for
by three fundamental factors: by lack of local nrg.g rzv~, by high expenses
for its tptation from other countries and regions and by the cost of setting up
local infrastructure. The prospects for growing nrg.g consumption will be
determined there mostly by the potential for its supply at competitive prices
and with the appropriate degree of reliability of deliveries. As soon as nrg.g
becomes more accessible for its utilization, the demand may rise very rapidly.
It will be especially significant in the industrial sector and in electric
energy production, where there are many potential major customers. Estimates
show that demand for imported nrg.g in the region may increase after 2005 to
reach 180-200 BCM per year.

In the nearest years, the demand of the East-Asian countries for nrg.g will be met
first of all by the import of liquefied natural nrg.g (LNG). After 2005-2007
they appear to need new sources of gas. Russia may become one of such sources.
At present we are examining several projects envisaging deliveries of Russian
nrg.g to East-Asian countries. A new nrg.g production center is intended to be
built beyond the year 2000 in the Irkutsk Region, from where natural nrg.g will
be transmitted to the city of Irkutsk. Later, on the basis of that center and
the nrg.g.ggr of the neighboring South-West areas of the Sakha Republic, it will
be possible to set up a major nrg.g production base there and link it by trunk
ptpt~ not only to Southern areas of East SBR and Far East of Russia, but also to
People's Republic of CHNa, SKOR, Republic of KOR and very likely to JPN.

An interest to the development of that nrg.g production base is now revealed by the business
communities of the East-Asian countries. Preliminary feasibility estimates
substantiate the construction of a nrg.g ptpt from East SBR via Mongolia to the
central areas of People's Republic of CHNa and further to its maritime area. The
available resources make it possible to send nrg.g to the Republic of KOR, and
the republic has already given its consent to join the project. Major JPNese
companies also revealed their interest in the implementation of that nrg.g
project. The next issues are to prepare a detailed feasibility study in
accordance with international requirements and to coordinate a project financing
scheme on that basis. Russia hopes that financing of the project that opens up
an era of constructing cross-boundary ptpt systems in Asia can be organized
employing Asian sources. Formidable financial resources are well-known to be
available in a number of Asian countries, and the resources are expected to be
invested efficiently.

Russian gasmen, with their many years of experience in exploration, production,
processing and tptation of nrg.g in very diverse natural and climatic settings,
are ready to cooperate with every interested country and company in increasing
the efficiency of utilizing that most progressive kind of fuel.

In the nearest years, the Eastern-most nrg.g base of Russia will be shaped up at the
SXL Island shelf, where in 2010 it is planned to produce no less than 20 BCM of
gas, half of which is going to be supplied to customers in the SXL Region, XBR
and Primorsky Territories while the other half will be xpted.

In a more remote perspective, over the year 2010, the nrg.g streams originating in the
West (in the North of Irkutsk Region or in the South-West of the Sakha Republic)
and in the East (in the SXL Island shelf) can become the basis of the unified
nrg.g tptation system of East Russia. It will not only supply nrg.g to the vast
territory from Irkutsk to Vladivostok, but also supply up to 50 BCM of nrg.g
annually to the Asian-Pacific countries.

A new stage in constructing the Eurasian system of transcontinental nrg.g ptpt~,
unprecedented in terms of its length and throughput, will be started by laying
nrg.g trunk ptpt~ in the South of East SBR from the polar nrg.g.ggr of the
Tyumen Region, thus connecting the nrg.g ptpt systems of the East and West of
Russia.

There is every prerequisite needed to provide for the steady progress of the nrg.g sector
in Russia for many years ahead: abundant rzv~, capacious markets, a vast
economic, research and engineering potential and reliable long-term contracts
with dozens of countries.

RAO Gzz.crp
, being aware of the ever-increasing significance of natural nrg.g in the world
economy, is open for mutually beneficial cooperation with every country, is
ready to go on taking an active part in solving the problems of development of
the world nrg.g market and in strengthening business contacts with the leading
nrg.g companies, aiming at providing energy security of all the countries of the
Eurasian region, including Russia.

SOMETIMES
it is easy to forget how great Gzz.crp
truly is. The razor-edged barrage of
skepticism, criticism and scandal that has rained down almost continuously upon
the company over the past few weeks has affected nearly everyone's perception of
this otherwise amazing organization.

But for all
who were listening in to speeches at the World Gas Conference last week in
Copenhagen, CEO Rem Vyakhirev [Viakhirev] left no possible doubt that Gzz.crp
is headed
straight toward the Olympus of the world's largest corporations.

The thrust
of Vyakhirev's speech was that Gzz.crp
is prepared to make the necessary steps to
meet rising demand for natural nrg.g not only in Europe, but in Asia as well.

And it
doesn't stop there: Vyakhirev has his sights on North and South America.

"When the
Russian Arctic offshore nrg.g.ggr are in operation," Vyakhirev said, "that
creates the ground for liquefied natural nrg.g [to be shipped] to the North
American and South American markets, too.

" With an
estimated 33% of the world's nrg.g rzv~ concentrated in the hands of one
company, Gzz.crp
has the resources to meet the challenge.

That is
why, when considering the strengths and weaknesses of Gzz.crp
, one should just
recall the dynamics of the world nrg.g industry.

In 1995,
nrg.g consumption in Western Europe increased by nearly 5%, and reached 377 bcM
. Imports increased by 10%. And Gzz.crp
was there every step of the way, supplying
one-third of total consumption in the market.

Keeping in
mind that Western European demand will grow by about 33% by 2010, and imports
will grow to 50% to 60% of consumption needs, Gzz.crp
begins to look like a
unspoiled diamond mine.

{nrg.p.nvy
ptpt} Regarding Asia, Vyakhirev
said demand there will increase by an estimated 2.6% a year, which in a large
part will be met by shipping liquefied nrg.g from the Middle East, Australia and
Indonesia.

But
delivering nrg.g by ship is expensive and uncompetitive compared to piping it,
and Vyakhirev believes it would be advantageous to develop nrg.g.ggr in Southern
Russia and tpt it by ptpt to CHNa, KOR and other importers.

Granted,
Gzz.crp
will have competition in these markets, but there are only a handful of
countries that will be in a position to handle the world's rapidly growing needs
for gas.

On the
European sub-continent, the chief competitor is NOR, and the North African
neighbors LBY and Algeria can provide alternative sources.

Still,
Europe possesses only 5% of world nrg.g rzv~, and Africa 7%.

If we look
back at Asia, Australia also has 7% of world rzv~, and the Middle East has
about as much as Russia does.

However,
getting the Middle Eastern countries to agree on anything, much less
constructing a tntn ptpt system to tpt nrg.g to a populous and emerging Asia, is
well-nigh impossible.

For exactly
these reasons, Vyakhirev has a vision of a unified nrg.g system in Russia
supplying this growing world demand for inexpensive natural gas.

In fact,
Vyakhirev envisions the great Eurasia land mass connected by a string of awesome
ptpt~ that stretch from CHNa to Ireland and from JPN to Spain - a powerful
system of arteries with the heart pumping straight out of Western SBR.

As one can
see, the prospects look superb.

In fact,
once the significance of all these long-term strategies start to sink in, one
definitely starts to get an itch for Gzz.crp
stock. (Buy now, and watch it climb
over the next 15 years, one is inclined to think.)

But the
markets are sensitive to perceptions and short-term results, the two main
factors behind Gzz.crp
's stock slump on the home front.

As of June
13, the stock was at $0.57, its lowest mark in about three months, due in large
part to a lack of orders from foreign investors, translating into a market
capitalization of $13.6 billion.

Nevertheless, Boris Nemtsov is sanguine: He believes that Gzz.crp
's market cap will
grow to $100 billion, which is six times its current level.

This kind
of market cap, by the way, would put Gzz.crp
in the Top 10 most capitalized
companies in the world according to the Financial Times, ahead of such classics
as AT&T, Microsoft and Toyota. Gzz.crp
's current ranking is roughly in the 220s.

In the
short term, Gzz.crp
's commitments to restructuring and paying its debts to the
government will be the catalyst to sparking a rebound.

On the
other hand, the world of investors in Russia is still too small to create the
kind of price growth Nemtsov and company officials like to rave about.

However,
the company may soon announce some preliminary results of its first sweeping
rzv~ audit, which will finally give us an idea of what kind of assets this
unequaled company has in the ground.

Gzz.crp
officials have already promised that the results will be good, which will make
it all the harder for us not to get a slice of the enormous Gzz.crp
pie.

Gary
Peach is the editor of the weekly newsletter Capital Markets Russia.

Major Topics
I. Introduction of speaker and
briefing status
II. Proposal to send a Special
Envoy to Cambodia
III. JPN-Russia relationship

[…]

Q: You talked about the fact
that now JPN and Russia have a different relationship than they did before.
You still have a border problem. Do you feel that the breakup of the Soviet
Union has helped JPN move closer to Russia? In other words, when the Soviet
Union was in power, did they feel that was something that was never going to
be taken care of, but now that it is broken down into just Russia that you
have to deal with, there is a great possibility of handling that?

A: Basically, the territorial
issues should be solved among the parties directly concerned. In this sense
it is natural that Russia and JPN will directly engage on this issue. At the
same time, Mr. Hashimoto repeatedly asked for cooperation from the other
countries on this. Incidently, Mr. Hashimoto and Mr. Yeltsin had a very good
talk this morning, and we hope to make progress on this territorial issue.
At the same time, we are very happy to have Mr. Yeltsin at the Summit. As I
told you, the Prime Minister welcomed the participation in the Summit. We
would like to expand the relationship with Russia, both bilaterally and at
international fora, such as this Summit. Therefore, what we would like to do
is expand our relations in many fields and through the widening of our
relationship we would like to make progress on the territorial issue as
well.

Q: Is there a point of with
unilateral trade now going on with Russia?

A: For example, in comparison
with our trade with CHNa, the portion of our trade with Russia is much less.
But we would like to deepen not only the trade relationship, but also other
type of economic relations, such as the increase of JPN's direct investments
in Russia. Very recently, the First Deputy Prime Minister, Mr. Nemtsov,
visited JPN and he proposed concrete measures to deepen economic relations
with JPN, which was highly appreciative. This subject was touched by Mr.
Hashimoto and Mr. Yeltsin this morning too. By doing so, now we can hope
that we can develop trade and economic relations with Russia. At the same
time, I would like to stress that while we are deepening our economic and
trade relationships, we would also like to deepen our political
relationship, conducting high-level policy dialogue including security
dialogue. At the same time, our eventual aim is to fully normalize the
bilateral relationship between the two countries through solving the
territorial issue and signing a peace treaty. Thank you very much for your cooperation

<>1997je22:CHNa, Russia Seen Signing Deal on nrg.g ptpt
NEW
BEIJING -- CHNa and Russia are expected to sign an agreement this month on a
multi-billion dollar project that could exploit SBRn natural
nrg.g to meet CHNa's growing demand for energy,
Russian diplomats said on Thursday.

They described the long-awaited
accord as a "framework agreement" that would be
signed during the visit to Beijing this month by
Russian Prime Minister Victor Chernomyrdin.

<>"The specifics of the project
probably will not be part of this agreement," said a Russian
diplomat.

CHNa once was a net oil xpter but
its rapid economic growth has fueled demand
for energy.

CHNese officials estimate oil
imports could reach an annual 50 mT by the year 2000.

The Sino-Russian pact would call for
cooperation in development of an Irkutsk natural
nrg.g field and the construction of a ptpt through
Mongolia to eastern CHNa.

The final preparations for the
accord are expected to be discussed during the meetings of
the Sino-Russian joint commission on
economics, science and technology.

Chernomyrdin will meet his CHNese
counterpart Li Peng on June 27 after a stopover in
Shenzhen, near the British territory of Hong Kong.

He is expected to be accompanied by
a delegation from Gzz.crp
, the Russian natural nrg.g
monopoly.

Russian sources in Beijing said,
however, there was no agreement on financing for the
project, which would stretch into the next century.

SKORn and JPNese companies have expressed interest in providing
financing but they were insisting participation be tied
to the use of their own equipment.

Russia, however, was eager to use as
much of its own equipment as possible, the
sources said.

Relations between CHNa and Russia
have been gradually improving since 1989 when
the two sides formally mended ties strained since
the Sino-Soviet split of the 1960s.

In April, CHNese President Jiang
Zemin visited Moscow where he and Russian
President Boris Yeltsin signed a treaty on troop
reductions along the Sino-Russian border.

In a clear reference to the USA, the
two leaders pledged to oppose domination
by any one country in the post-Cold War era.

Russia and CHNa have also said they
want to see an improvement in economic ties
matching gains on the political front.

Beijing has said trade could reach
$8 billion to $10 billion this year and it hopes the
total could reach $20 billion by 2000. (Reuters)

<>1997jy01:CHN RUS agreement:
BEIJING (AP) - China and Russia signed a multibillion-dollar oil and natural gas deal Friday, as well as an agreement easing railroad
travel between the two countries.

The agreements, part of a series of trade-boosting measures, are the high point of a visit by Russian Prime Minister Viktor Chernomyrdin, who arrived Thursday.

They were reported by state television, which did not give details. Chinese and Russian officials wouldn't discuss the oil and natural
gas deal with Western reporters.

But Russia's Interfax news agency said the gas deal was worth $4
billion to $5 billion and calls for Russia to supply 26 billion to 39
billion cubic yards of gas annually to China. It said a ptpt would be built to
carry natural gas to China from the Irkutsk region in western SBR.

The report did not mention oil. But foreign news reports have valued
the sale of Russian oil and natural gas to China at as much as $10
billion.

In another agreement Friday, China agreed to allow Russian trains
onto its territory to simplify and speed up shipping between the two
countries.

Chinese Foreign Ministry spokesman Cui Tiankai said Thursday the agreements were intended to increase annual trade between the countries to $20 billion by 2000, up from about $7 billion last year.

<>1997jy:GRZ|The Georgian International Gas company, incorporated & will
spend up to $500 million
to upgrade ptpt~ that will eventually carry
300
bcf/year of gas.

As it
did with oil, GRZ is positioning itself as a transit point for gas
shipments. It has agreed to a natural
gas ptpt Ato be built across its territory that will bring Russian gas to
ARM and TRK

Part of
this gas will go to Georgia for payment.

GRZ has
small gas resources of its own, although it has yet to develop these
resources. Georgia must import its natural gas; however, its only suppliers,
Russia and TKMistan, cut off gas supplies in 1997 for lack of payment. Gas
supplies from TKMistan had been received via a North Caucasus-Transcaucasian
ptpt through Russia. Georgia's gas imports had been interrupted several
times before because of civil strife and the country's inability to pay. On
March 3, 1995, bombs blew up the ptpt delivering gas through Georgia to
Armenia. Georgia's gas imports had been used mainly by the Rustavi steel
mill and the Tbilisi power station.

Thank
you for giving me this opportunity again to address you today at this
informal discussion group of the JPN Association of Corporate Executives. I
recall speaking here last year on structural reform in our country. Today, I
would like to draw your attention to how our nation s foreign policy should
be shaped, focusing especially on our foreign policy toward Russia, and also
on our relations with CHNa and the "Silk Road" region.

The
State of the World

May I
begin with my perceptions of the current state of the world so that everyone
can fully grasp why I have decided to speak today about such a topic.

As many
have already stated, we are now living in the post-Cold War era. This era is
most notable for the fact that the military confrontation between the USA
and the Soviet Union has come to an end, and the ideological conflict
between liberalism and communism has concluded. The disappearance of
communism as a goal gives an opportunity to steer many countries toward a
liberal, free-market economy in a broad sense, although the specific path
taken and the rate of progress achieved by each country vary. For example,
and I will elaborate on this later, CHNa has opted for a socialist
market-economy path. Furthermore, with the end of the Cold War, the Soviet
Union collapsed, bringing many new countries into existence. As a result, a
new task has been to achieve political and economic stability in those
countries and to create a new international order encompassing surrounding
countries.

Furthermore, we are now in the age of the so-called borderless society. We
could not even imagine the evolution of an international economic community
some time ago; economic activities now go beyond national borders and
corporations have come to select the countries in which they operate. On the
one hand, the globalization of economic activities [tntn.ekn], by enhancing
interdependence between countries and regions, has created a situation in
which problems can no longer be solved easily. On the other hand, by
expanding the potential loss resulting from a cut-off of exchanges with
partners, such globalization [tntnation] has the potential to contribute to
maintaining peace. A long time ago, Charles Louis de Secondat Montesquieu
said that peace is the natural result of commerce and all unions are based
on mutual necessity. The expansion of such interdependence was limited to
the countries of the former Western bloc during the Cold War. However, as I
said earlier, the end of the Cold War has created the possibility of
expanding this in one stroke to encompass other countries, including the
nations of the former Soviet Union.

Reaffirmation of the JPN-USA Security Arrangements

What is
it, then, that JPN should do, given this state of affairs?

As you
all know, since the establishment of my administration, I have, more than
anything else, devoted myself to reaffirming the significance of the JPN-USA
security relationship. There have been times when, both in JPN and the USA,
people have questioned whether the JPN-USA security arrangements were still
necessary in this post-Cold War era. The end of the Cold War did not,
unfortunately, signify an end to all international conflicts. Moreover, I
have been keenly feeling that it is the JPN-USA security arrangements which
provide a sense of security to the countries of the Asia-Pacific region from
my conversations with leaders from other parts of Asia. Therefore, while
tackling the difficult issue of USA military bases in Okinawa, I have been
striving to reaffirm the significance of the JPN-USA security arrangements.
Of course, this issue has by no means been fully resolved. As for the
so-called Memoranda of May 15, the part which was not made public at the
last occasion will be handed to the Okinawa Prefecture tomorrow. I believe,
however, that we have made headway, through the efforts in compiling the
JPN-USA Joint Declaration on Security issued by President Clinton and myself
in April of last year and through the review work of the Guidelines for
JPN-USA Defense Cooperation on which the Interim Report was issued in last
June.

The
basic objective of JPN s foreign policy is to maintain the peace and
prosperity of the Asia-Pacific region. In that sense, maintenance of the
JPN-USA security arrangements, as I have just described, and the creation of
frameworks in this region through such fora as the ASEAN Regional Forum and
Asia-Pacific Economic Cooperation can be characterized as creating a
platform to stage JPN s basic foreign policy.

However, I believe that amidst the sweeping changes in international
relations resulting from the end of the Cold War, the foreign policy of our
nation has come to an important period in which we must greatly push to
enlarge the horizon of our foreign policy toward the Asia-Pacific region as
we forge a new diplomatic perspective. I prefer to call this perspective
Eurasian diplomacy.

Enthusiastically Developing a Eurasian Diplomacy

I am
sure that you are all aware that this summer, a model for a new security
order spanning from the Atlantic Ocean across Europe was agreed upon between
the nations of Europe and North America and Russia, and the North Atlantic
Treaty Organization has reemerged in a new form. Indeed, we have seen the
clear emergence of one part of the post-Cold War international political and
economic structure centering on Europe, which, in the economic sector, had
already come into existence in a new shape in the post-Cold War era through
the Maastricht Treaty.

I have
carefully watched this new structure, stemming from the USA, across the
Atlantic Ocean, through Europe and over the former Soviet Union, to reach
the Pacific Ocean as a vast region which takes on the characteristics of a
Eurasian diplomacy viewed from the Atlantic." It was in this context that
before the Denver Summit the leaders of European countries and North America
were interested in how JPN would react to the idea of having a Summit of the
Eight.

At such
an historical period of transition, have we not reached a time when we must
introduce a new dynamism into our nation s foreign policy by forging a
perspective of a Eurasian diplomacy viewed from the Pacific"? As we look
forth beyond JPN, out across a huge continent, this perspective which now
emanates from within us spans the Russian Federation, CHNa and the Silk Road
region, encompassing the Central Asian Republics of the former Soviet Union
and the nations of the Caucasus region.

As I
stated earlier, one of the traits of the post-Cold War era was the birth of
many states, beginning with the Russian Federation, as a result of the
collapse of the Soviet Union. These countries have encountered various
difficulties as they basically seek to shift to democracy and a
market-economy system. The Russian Federation has experienced the birth
pains of democratization and transition to a market economy, the lack of an
effective organization governing its vast landmass, the downward spiraling
of productivity and other great hardships in dealing with the dark legacies
of the Cold War era, symbolized in the challenge of dismantling nuclear
weapons. Still, from out of that process, in both the political system and
economic structure, and in the pursuit of honor and dignity as a nation, we
have seen the slow but certain birth of a new Russia. It was from that
perspective that the USA and Europe have made a diplomatic decision to
expand NATO, as described earlier, and to have a Summit of the Eight at this
year s Denver Summit.

Turning
our eyes to CHNa, we have seen it take the open and reform policy under the
slogan of socialist market economy. Although CHNa has achieved high economic
growth, in the transition to a market economy, it faces many challenges,
including reform of state-run enterprises and regional disparity. In
addition, it holds issues which must be dealt with in the environment and
energy sector. I firmly believe that participation by CHNa in international
frameworks and strengthening of its status as a constructive partner in the
international community will stably advance openness and reform in CHNa and,
is therefore indispensable for the stability and prosperity of the Asian
region. There are some difficult issues in JPN s foreign policy toward the
Russian Federation, such as the Northern Territories issue, and JPN has
certain issues in its foreign policy toward CHNa which arise due to its
location as a neighboring country. However, the developments in these two
great powers, Russia and CHNa, now hold the key to the formation of an
international order. One might even go so far as to say that the focus of
world diplomacy has shifted from an axis of the Atlantic Ocean and Europe
poised on conflict between the USA and the Soviet Union to an axis spanning
the Eurasian landmass encompassing many nations, small and large. Hence,
just as JPN has long since had to stress to the USA the legitimacy of our
policy of active engagement in CHNa, I believe that it is time to strive
even harder to build even more constructive relations with Russia and with
CHNa. Many have already pointed out that CHNa and Russia have broken away
from a relationship of conflict and are now coming closer together in the
economic and other sectors. Take, for example, the energy sector, in which
the way that CHNa, which is rapidly becoming an energy importer in order to
keep up with its rapid pace of economic growth, develops its relationship
with Russia, which views energy development as the trigger which will
revitalize its own economy, will have a tremendous impact on the energy
situation in Asia and indeed, in the entire world, as well as on the global
economy [tntn.ekn] as a whole.

Furthermore, in this post-Cold War era, the Central Asian Republics and
nations of the Caucasus region which have come into existence in this vast
area, which we may call the Silk Road region, are making great efforts to
establish affluent and prosperous domestic systems under a new political and
economic structure and to forge peaceful and stable external relations with
their neighboring countries. Furthermore, the rich oil and natural nrg.g
resources in the CSP.S
region are having a steadily expanding influence on the
world energy supply. In addition, these countries have great potential to
serve as bridges, offering distribution routes within the Eurasian region.
Fortunately, these countries have great expectations of JPN as an Asian
country, and at the same time, JPN has deep-rooted nostalgia for this region
stemming from the glory of the days of the Silk Road. Indeed, there already
exists a solid foundation upon which to build firm relations with these
countries as friendly states.

Positive assistance by JPN for the nation-building efforts of these
countries will most certainly have a constructive significance, not only for
these newly independent states, but also for the peace and prosperity of
Russia, CHNa and the Islamic states, and I am certain that it will expand
the frontier of JPNese foreign policy to the Eurasian region at the dawn of
the 21st century. It is from this perspective that I would like to talk to
you about how we should shape our foreign policies, centering on our
policies toward the Russian Federation, followed by our policies toward CHNa
and our policies toward the Silk Road region.

Relations with the Russian Federation

After
the Second World War, the international community experienced a series of
trials and errors to create a new order. However, among the
interrelationships linking the USA, CHNa, JPN and Russia, nations which
exert an important influence on the peace and stability of the Asia-Pacific
region, it cannot be denied that the JPN-Russia relationship has lagged
behind. While it is true that there have been diverse historical
developments between the two countries, it would not be good for relations
between neighbors such as JPN and Russia to remain at the current level,
either in terms of the interests of JPN and Russia or the Asia- Pacific
region overall. Improvement in this bilateral relationship is without doubt
one of the most important issues facing both of our governments as we
approach the 21st century. Last month, at the Denver Summit of the Eight, I
told President Boris Yeltsin directly that I think that we must improve the
JPN-Russia relations with a view to creating new cooperation, to which the
president responded reassuringly, Indeed we should.

What,
then, are the principles which should guide us in improving JPN-Russia
relations? I would like to touch on three principles today.

First
of all is the principle of trust. At the time of the negotiations for the
1855 JPN-Russia Treaty of Commerce, Navigation and Delimitation, the Russian
vessel Diana, on which the Russian delegation, whose head was Commodore
Putyatin, was on board, sank in an earthquake-generated tsunami. A film
featuring this process has recently been produced, and I am pleased with
this in that we can be reassured of friendship between JPN and Russia. At
the time our nations were in the throes of grave negotiations aimed at
securing our respective interests. Still, we put aside our differences and
cooperated to build a new boat for the Russians. I believe that this story
shows that in relations among states as well, ultimately, unless the people
on both sides of the table truly trust each other, there can be no real
progress. I have tremendous respect for the achievements which President
Yeltsin has made in overcoming the many serious difficulties which have been
faced in the grand reform through which the former Soviet Union gave birth
to Russia and in the process of undertaking the great and historic task of
reform toward democracy and a market economy. In my talks with President
Yeltsin at the Denver Summit of the Eight, which was the second occasion for
us, we deepened our personal friendship and I could sense in our discussions
President Yeltsin s as a human being. It was in such an atmosphere that I
proposed to President Yeltsin that we seek the possibility of meeting again
over a weekend before the end of the year in a casual manner, should he have
such an occasion as to travel to the Russian Far East. According to recent
reports, President Yeltsin has stated that he hopes to meet with me soon and
I sincerely look forward to again meeting the president and to further
deepening the friendship and trust which we share.

The
second principle in seeking to advance JPN-Russia relations is mutual
benefit. Given our geographic position as neighbors and the great influence
we both wield, it is certain that there will be many cases in which we must
coordinate our interests. At such times, an approach through which one side
gains, unilaterally creating both a "winner" and a "loser", can in no way
yield a true resolution. In considering this point I should like to recall
the wisdom of President Yeltsin s oft-emphasized statement that in the
process of concluding the Cold War between East and West there were neither
winners nor losers.

The
third principle which I would like to speak of is that of maintaining a
long-term perspective. Specifically, improvements in the JPN-Russia
relationship must aim to create a sound foundation for the 21st century so
that in that century and the following centuries to come, our children and
our children s children can inherit it and build further upon it. Indeed, if
we are to achieve that, we must seriously consider the role of our
generation and consider what type of bilateral relations our governments and
our peoples should shape to build our legacy to our children and
grandchildren.

The
Northern Territories Issue

Needless to say, our objective is to improve the overall relations between
JPN and Russia, keeping these three principles in mind, and thereby create a
relationship with which our two countries can be delighted, spanning a
massive continent from the Asia-Pacific across to the western limits of the
Eurasian landmass.

In
order to achieve this goal, we must improve our relations across a broad
spectrum. First of all, I would like to talk about the issue of concluding a
peace treaty by resolving the Northern Territories issue, which is the most
difficult task persisting throughout the more than half-century since the
end of the war. As a result of long years of efforts made by many people
concerned, the best foundation exists in the form of the TKO Declaration,
agreed upon between us at the time of the visit to JPN by President Yeltsin
in October 1993. At the Denver Summit, President Yeltsin and I shared the
view that the TKO Declaration must be steadily implemented, and I believe
that indeed, this very issue is the one that can only be overcome through
the three principles I mentioned earlier.

First
of all, I would name the Framework Negotiations concerning JPNese Fishing
Vessels Operating in the Waters near the Four Northern Islands as an example
that the principle of trust has moved us forward even in the most difficult
issue. The parties to this negotiation have held direct and unreserved
discussions during these three years and have discussed difficult issues
head-on, creating a substantial level of trust in each other which has
fostered a positive environment absent from previous negotiations.

Secondly, I firmly believe that no resolution of the Northern Territories
issue can be achieved in a manner which creates a winner on one side and a
loser on the other side. It took fifty years for our countries to truly come
to understand this principle, which seems to be self-evident . Henceforth, I
intend to devote my utmost and pool my wisdom with President Yeltsin in
order to achieve that goal based on the principle of mutual benefit.

Thirdly, we must remember that the Northern Territories issue is a matter
which our nations have been unable to resolve in fifty years. Obviously, it
is very difficult to resolve it. Still, through the hard work of our
predecessors, we have achieved many advances, beginning with the TKO
Declaration. One example of a major advance toward the resolution of this
issue is the movement to foster continuing trust in the islands through
visits to graves in the Northern Territories, mutual visits between JPNese
citizens and current Russian residents of the Northern Territories and
Fishery Frameworks which are currently under negotiation, among other
measures. More than anything, steady, concrete progress could become a
landmark that will not have our children s and grandchildren s generations
inherit this issue. Considering the positive achievements made thus far, I
believe that it is the responsibility of our generation to now show the way
forward toward the resolution of this issue. I would like to discuss this
matter calmly, based on a long-term perspective.

JPN-Russian Federation Economic Issues

In the
economic relations between JPN and Russia as well, there is a need to seek
concrete progress based on these three principles. From this perspective, I
would like to take advantage of this opportunity to put forward two ideas.

First
of all, I propose that consideration focus on strengthening economic
relations with Russia, especially in SBR and the Far East region, and in
particular, in the energy sector. There already exists the Support Plan for
Russian Trade and Industry, which I proposed during my tenure as Minister
for International Trade and Industry, as well as the Cooperation Committee,
which was created based on an agreement concluded with twelve former Soviet
republics. Through these and other fora, careful assistance is being
provided for efforts to make a transition to a market economy, and these
must be continued. The ideas which I would like to outline here consist of
efforts beyond these to promote development and foster cooperation,
especially in the energy sector in SBR and the Far East region.

Needless to say, Russia is a nation of great natural resources, which if
used and developed effectively can trigger stable economic development and
contribute to stabilizing the energy needs of the Asian region, where
economic growth is generating rising energy demand, and thereby stabilize
the energy supply of the world as a whole. Further, the links in the energy
supply-and-demand relationship shall be clearly connected to fostering
relations of trust and peace throughout East Asia.

Specifically, we certainly could move ahead in dialogue on energy
development in SBR and the Far East between JPN and Russia. For example, we
continue to cooperate in the oil and natural nrg.g projects in SXL, which
been already commenced, natural nrg.g development projects and economic and
technical possibility of ptpt construction projects in places like Irkutsk
and Yakutsk, can no doubt provide opportunities for discussion and
examination. We can certainly further enhance the dialogues which have
already begun through such fora as the JPN-Russian Federation
Inter-Governmental Commission on Trade and Economic Affairs. Naturally, in
order to move ahead with such projects, it is essential that an adequate
investment environment be created in Russia, and I am confident that we can
expect great things from cooperation through the Initiative for the
JPN-Russia Cooperation in the Sphere of Investment, on which President
Yeltsin and myself shared the view at the Denver Summit of the Eight.
Furthermore, the Energy Charter Treaty can play an extremely important role
as an international agreement on investment promotion and trade
liberalization in the energy sector, and I have great expectations for its
enactment. In addition, there is certainly a need for us to cooperate
further to realize the holding of a conference of the eight countries on
energy issues proposed by the Russian Federation in Denver.

[5000]
Secondly, I should like to tell you of the great interest with which I listened
to a recent speech given by President Yeltsin broadcast on the radio. In his
radio address of 11 July, the president stated that he had ordered the drafting
of a plan aiming to foster Russian corporate executives including 5,000
executive trainees, each year through the dispatch abroad of young, talented
Russians. As a response to President Yeltsin s enthusiasm, I intend to take up
his challenge and propose that in the future, in consultation with you, the
representatives of our nation s business community, the young generation of
Russians learn from all of JPN s experiences, spanning the macro- as well as the
microsectors, gaining from actual hands-on corporate know-how beginning with our
nations economic policies thereby developing the human resources essential for
contributing to the building of a new Russia. I would like to tell President
Yeltsin that we are more than willing to extend our active cooperation to build
human resources in Russia.

I have
candidly outlined for you my thoughts on JPN-Russia relations, although clearly,
some are still in the process of being formulated. I sincerely look forward to
having the earliest possible opportunity to discuss with President Yeltsin in a
frank and friendly atmosphere the issues that I have just described, as well as
other issues which must be addressed in creating a multilayered bilateral
relationship between our two countries that encompasses the security sector and
contributions to the Northeast Asian region.

JPN s
Relations with CHNa

Next, I
would like to touch upon JPN s relations with CHNa. But today, I am not going
into details and I would like to briefly mention basic ideas.

As everyone
knows JPN and CHNa share a 2,000-year history of friendly relations. However
there was a truly unfortunate historical experience at a certain time in recent
history. JPN, sincerely recognizing and reflecting on such past history, under
its Constitution based on democracy and pacifism, after the Second World War
achieved rapid economic growth and became the first Asian country to establish
itself as an advanced industrialized nation. On its part, CHNa has overcome many
tasks and effected a great transformation, and has recently achieved dramatic
development especially through open and reform policy.

In view of
these historic experiences and the status of our two countries in the
international community of today, continued stability and development in our two
nations into the 21st century is extremely important, not only for our bilateral
relationship alone, but for the peace and prosperity of the Asia-Pacific region
and therefore that of the whole world. We must also recognize the fact that this
indeed imparts to our two nations a great responsibility.

This year
marks the 25th anniversary of the normalization of relations between JPN and
CHNa. I am planning to visit CHNa at the beginning of September and intend to
take advantage of that opportunity to add a new page to the long history of
friendship between JPN and CHNa. And at the same time, I believe that the two
countries must tackle many international issues, while JPN encourages greater
cooperation between CHNa and the international community so that CHNa can secure
its standing as a constructive partner in the today's Asia-Pacific region.

In this
regard, it is absolutely vital that CHNa, whose economy is expanding,
participate in the international economic system and therefore JPN continue to
support the early accession of CHNa to the WTO and is more than willing to
cooperate for that. I conveyed this message to the other leaders at the Denver
Summit meeting. Furthermore, while continuing to promote cooperative relations
in such international fora as the United Nations Security Council, APEC and ARF,
I believe that it is important to deepen dialogue between JPN and CHNa on issues
directly related to the stability of this region, including the issue of the
KORn Peninsula.

[ecx & nrg] Two common
issues in which JPN and CHNa ought to cooperate in particular are topics I would
like to discuss today, namely the environment and energy.

Considering
environmental issues, in addition to the need to protect rare species and
forests, the issue of air and water pollution resulting from the rapid economic
development pursued by CHNa has the potential to exert a direct influence on our
nation, which borders CHNa, in the form of acid rain and other effects. JPN,
principally through the JPN-CHNa Friendship Environmental Protection Centre,
makes efforts to monitor air pollution levels, take urban air pollution control
measures and transfer related techniques. The Third Conference of the Parties to
the United Nations Framework Convention on Climate Change (COPIII) is scheduled
to be held in Kyoto in December of this year. Although the positions of
participating countries on this conference have not yet converged, I believe
that in the months remaining before this conference there is a need to continue
to engage in dialogue with CHNa and other developing countries in order to gain
their cooperation despite positions on the conference are still diversified
among participating countries.

Similarly,
in the energy sector, I believe that the high rate of economic growth currently
being achieved by CHNa will have a tremendous influence on global energy [tntn]
issues. As such, on the demand side, it is necessary that we consider how JPN
and CHNa can cooperate to improve CHNa s energy efficiency rates, which are as
low as one-tenth of JPN s. On the supply side, securing new sources of energy is
an issue which may pose various difficult challenges, and I believe that
dialogue on joint oil-field development cooperation and ways to promote the use
of nrg.n will become even more important in the future. Furthermore, as I
mentioned earlier in the context of JPN-Russian Federation relations, the
establishment of a secure energy supply structure in Russia is important for
CHNa as well. Indeed, cooperation on development of natural nrg.g in Irkutsk has
already begun between CHNa and Russia, and one proposal would be for a
development concept including cooperation among CHNa, Russia and others
including JPN.

Of course,
there are other common issues on which JPN and CHNa can cooperate, including
food supply, population and health and medical care, including measures to
combat HIV. After my visit to CHNa, a visit to JPN by a leader of the Government
of CHNa is planned, and I believe that these opportunities will allow us as
neighbors who stand in a position of responsibility for our region and the world
to further deepen our dialogue with each other.

Turning our
eyes to the history of civilization, treasures kept in the Shosoin of the
Todaiji Temple was brought to JPN through a route called the 'Silk Road'. I
believe that many people including myself try to imagine what impact the
civilization introduced to our country had on people at that time and on us at
the present time. With this in mind, we would like to cooperate as much as
possible to preserve and succeed to the future those historical and cultural
heritage in this area which are in danger.

JPN s
Relations with the Countries of the Silk Road Region

In closing,
I would like to touch upon JPN s diplomacy vis- -vis the Silk Road region.

JPN has
already used Official Development Assistance (ODA) and other means to help the
development of the New Independent States of Central Asia, and has sought to
enhance its bilateral relations with these countries. In the future, JPN s
foreign policy toward this region will be crafted as an organic component of the
broad scheme of relations with Eurasia. In this process, I believe there is a
need to develop even more elaborated foreign policies than in the past. Member
of the House of Representatives Keizo Obuchi reported to me on his impressions
immediately after returning from his trip earlier this month to the countries of
Central Asia, where he met with their leaders and other officials. Mr. Obuchi s
impressions matched exactly the line of thought which I have outlined here.

I would
like to channel JPN s foreign policies toward this region into three directions.
First of all, there is political dialogue aiming to enhance trust and mutual
understanding. Secondly, there is economic cooperation as well as cooperation
for natural resource development aiming to foster prosperity. Thirdly, there is
cooperation to build peace through nuclear non-proliferation, democratization
and the fostering of stability.

Specifically, in terms of enhancing trust and mutual understanding, a remaining
task is to strengthen even further the exchanges with countries with which there
have already been exchanges of officials and at the same time, to realize
exchanges at the official level with countries with which there has not been a
sufficient level of exchanges. Indeed, in the near future, a minister-level
visit to this region is planned. In terms of cooperation to foster prosperity,
it will certainly be important for JPN to promote regional cooperation aiming to
create a tpt, telecommunications and energy supply system, and for JPN to
cooperate in developing energy resources in that region. I am ardently watching
the efforts of JPNese corporations toward their participation in the
exploitation of oil and other energy resources in such countries as AZRan and
KZXan. In terms of cooperation for peace, to begin with, this autumn, JPN will
invite appropriate experts from the region and concerned countries to TKO for a
Comprehensive Strategy Seminar, which we will host with a view to more actively
contribute to enhancing peace and stability in this region.

It is clear
to all that private-sector exchanges must play a vital role in these
developments. I know that all of you are already keenly interested in this
region and I understand that some missions are planning to visit Central Asia in
the near future. I have great expectations that these will be extremely
fruitful.

Conclusion

Today I have tried to present my thoughts on what JPN should do in order to foster
political and economic stability in the Eurasian continent by touching upon my
views of JPN s relations with Russia in particular, and also with CHNa and the
"Silk Road" region. We should avoid situations in which a clash of national
interests on a particular issue constrains wide-ranging exchanges between two
countries and limits the realization of fruitful opportunities by the peoples of
both countries. In a sense, conflict of interest and confrontation lie in our
minds. Whether we can overcome confrontation, therefore, depends largely on
creative thinking, which would enable those responsible for managing
confrontation to examine wide possibilities. If there is way in which the
Government could help, please do not hesitate to ask.

I hope
that my comments here today will have stimulated your thoughts and I look
forward to your comments. I would like to thank all of you for your
attention today.

<>1997jy?:
http://us-tech.com/july97/news/news002.htm

Moscow's Gzz.crp
Buys USA-Made Fuel Cell Power System [ecx
nrg.new]

International Fuel Cells (IFC) will be
shipping a commercial fuel cell built by its subsidiary, ONSI Corporation, to
Gzz.crp
, the largest natural nrg.g company in the world. Gzz.crp
serves all of Russia,
eastern Europe, and most of western Europe. The company controls about
one-quarter of the world's natural nrg.g rzv~.

The fuel cell will be sited in a planned
environmental community in Moscow, and signals a significant movement in Russia
toward improving not only its energy supply but also the environment. "This fuel
cell holds great potential for Russia," said Vladimir A. Usoshin, General
Director of Orgenergogaz, the Engineering Subsidiary of Gzz.crp
. "We need more
clean, reliable power, especially power fueled by natural gas."

"For the USA, the Gzz.crp
purchase
represents a continued expansion of trade relations between our two countries as
well as an xpt of environmentally clean USA products," said Robert Suttmiller,
IFC president. "This also is a significant step forward for joint USA-Russian
efforts to develop alternate energy technologies and improve the environment."

"The sale to Gzz.crp
highlights the
increased sensitivity to the environment that is now prevalent throughout the
world," Suttmiller said. "Clearly, fuel cells offer all nations a significant
opportunity to satisfy expanding energy demands without increasing pollution."
Gzz.crp
purchased an ONSI fuel cell power plant called the PC25™. The PC25 provides
200 kilowatts of electricity, enough to supply electricity for nearly 150 homes.

ONSI had already established itself as
the primary fuel cell source for NASA space missions. Today, ONSI fuel cells
generate power for hospitals, hotels, universities, military installations, and
manufacturers. Currently, more than 100 ONSI fuel cell systems are in operation
around the world.

"Improving the environment in Moscow and
throughout Russia and eastern Europe is a very important consideration for
Gzz.crp
We are very excited about the fuel cell because it operates so cleanly," said
Usoshin. "In addition, as our economy strengthens, we have found it is more
cost-effective to add fuel cells than to expand the electrical grid."

The ONSI PC-25 family, the only
commercially produced fuel cell system today, is a phosphoric-acid fuel cell
module that provides all of the anticipated advantages of clean power
generation: no environmentally destructive emissions or radiation, quiet,
on-demand operation, and extraordinarily high efficiency. Since fuel cells
normally produce direct current, the module's output goes through an electronic
DC-to-AC conversion system that is reported to be 98% efficient.

The module's water waste is recycled
back through the system's steam hydrogen reformer, since this consumes a certain
amount of water and heat energy. The rest of the system's heat output can be
efficiently converted to more electric energy by cogeneration, or can run a
building's heating and cooling systems. Nothing is thrown away, except for a
relatively small amount of carbon dioxide.

JPN
4th in
total primary nrg consumption after the USA, RUS CHNa
3rd in
nrg.p and nrg.a
5th in
nrg.c
6th in
nrg.g and nrg.eh

With highly
intensive industrial production taking place on its closely populated land, JPN
relied on overseas sources for 86.4% of its total primary energy supply in
FY1993. This rate is the highest of all major industrial countries. As a result,
JPN accounts for a very large proportion (14.3%) of the world's energy imports,
ranking second after the USA in total primary energy imports, first in nrg.c and
natural gas, and second in crude oil and oil products.

JPN's Long Term Energy Forecast

The JPNese government's current official
forecast for long term energy demand and supply (FY1992-2010) projects that
JPN's energy supply during the period of FY1992-2010 will increase at an average
annual growth rate of 1.2%, or in terms of oil equivalent, from 541 million kl
in FY1992 to 662 million kl in FY2010. The fundamental objectives of government
energy policy are minimum increases in energy demand, a lower dependency on oil
and a higher share of non-fossil fuels in total energy supply.

JPN's Primary Energy Supply and Demand

The energy demand and supply structure
in JPN changed significantly with the promotion of energy conservation [enx.c] after the
oil crisis in 1973. Growth of energy consumption fell below the economic growth
rate. Dependence on nrg.p was greatly reduced and dependence on nrg.a increased.

In FY1994, JPN's final energy demand
totalled 3,478 trillion kcal, a 3.8% increase from the previous year's level. By
economic sector, energy demand in the tptation sector showed a robust increase
of 4.7%, in contrast to 3.8% and 3.3% increases in demand for the industrial and
residential/commercial sectors respectively.

nrg.p: JPN
is in a vulnerable position with respect to energy supply security, heavily
relying on imports for 99.7% of its oil requirements. After the oil crisis in
1973, JPN worked to disperse its oil imports away from the Middle East.
Dependence on the Middle East dropped from 77.5% in fiscal 1973 to 67.9% in
fiscal 1987. However, the%age of imports from the Middle East has risen since
then because of an increase in the region's output and lower pricing policies,
and in 1995 it returned to 78.6%, exceeding pre- oil crisis levels.
Nevertheless, the central objective of JPN's oil supply policy continues to be
to ensure a steady supply of oil through diversification of supply sources as
well as development of its own oil sources.

Nrg.c: JPN's annual nrg.c supply
(thermal and metallurgical) has reached the level of 133 mT in 1995, accounting
for 16% of its total primary energy needs in FY1993. With domestic production
shrinking below the level of 7 mT, JPN now depends for more than 90% of its
imports (126.18 mT in 1995, up 7.5% from 1994) on major offshore suppliers, such
as Australia (51.5%), Canada (14.1%) and the USA (8.9%).

Natural Gas: Demand for natural nrg.g
has been growing steadily, because of high calorie values and cleanness.
Consumption increased by 8.4% in FY1989, 6.8% in FY1990, and 6.3% in FY1993.
JPN's LNG imports account for 95.6% of JPN's total natural nrg.g supply. A very
high proportion (72.0% in 1995) comes from Indonesia and other ASEAN members.

nrg.a already an integral part of JPN's
energy mix, accounting for 11.3% of total primary energy supply and 27.9% of
total nrg.e power generation in FY1994. At the end of FY1994, the number of
nrg.a generation facilities in operation was 50, including 3 units commissioned
in 1994, with a total output of 40,531 MW. In 1995, 6 units are under
construction (6,707 MW), and 2 at an advanced stage of planning (1,650 MW), with
their capacities adding up to 46,000 MW. Additional capacity of more than 20,000
MW is proposed for construction by FY2010. Canada is the largest supplier (27%)
of uranium, followed by Australia.

The JPN Electric Power Survey Committee
of MITI published its latest revised 10-year forecast of JPN's electric power
demand through 2004, projecting that JPN's total power demand, including
non-electric utilities' in-house power generation, will grow at an average
annual rate of 2.3% to 1,029.8 billion kwh in FY2004.

In more general terms, or excluding
in-house power generation, total power demand is projected to increase from 709
billion kwh in FY1993 to 916 billion kwh in FY2004, increasing at an average
annual rate of 2.4%.

The 2.4% increase is to comprise a 2.7%
increase in lighting use, a strong 4.4% increase in the commercial sector, and
2.0% and 1.0% increases in the small- and large-scale industrial sectors
respectively.

MITI's new 10-year plan for expansion of
JPN's power generating capacity was developed on the basis of plans submitted by
the electric utilities. To ensure a stable supply of power to meet demand, said
MITI, overall power generating capacity must be increased by 68.19 million kw
during the next decade, from 197.69 million kw at the end of FY1994, to 265.88
million kw at the end of FY2004.

The table below shows a forecast by source of power generation in %age terms.

nrg.a generation is expected to increase its share from the 31% in FY1994 to 32% by
FY2004, with LNG- and nrg.c-fired power generation raising their shares from 22%
to 24% and from 12% to 20%, respectively, at the expense of oil-fired power
generation, the share of which will be reduced from 25% to 14% over the next
decade.

The JPNese government adopted two bills
to deregulate the energy sector during the current Diet session. The two
comprise:

i) a bill to revise the [nrg.e] Electric Utility Industry Law; and
ii) a bill to
abolish the [nrg.p] Provisional Measures Law for Importation of Specified
Petroleum Refined Products; and revise of the Stockpile, and Gasoline Sales and
Distribution Business Laws.

1) Petroleum Products Import Law

The Provisional Measures Law on the
Importation of Specified Petroleum Refined Products will be abolished at the end
of March 1996. This Law has effectively restricted petroleum importing for
civilian uses (gasoline, kerosene and light oils) to petroleum refining
corporations. Its abolition will allow competition in the domestic market
between domestic and foreign products and reduce discrepancies with other
countries in the domestic price structure.

2) Petroleum Stockpile Law

After abolition of the existing
petroleum products import law, importers of refined petroleum products will no
longer be required to possess refining facilities: they are, however, required
to be placed under the statutory control of the Petroleum Stockpile Law, which
obligates them to maintain 70 days' supply of oil products. If the new-comers
have refining facilities under their control, stockpiling can be in crude.
However, greater flexibility will be imparted to the officially authorized
group-based storage system to encourage its use by new importers following
abolition of the existing Law.

3) Product Quality Standards

Although import product quality
standards (such as octane levels) are a private sector responsibility, safety
and environment-related quality standards (such as the lead content of gasoline)
will be maintained through administrative or ministerial ordinances.

4) Gasoline Sales & Distribution Law

Under the existing Gasoline Sales and
Distribution Law, 44 zones are designated by the zoning system, and excessive
competition is barred by imposing restrictions on the construction of gasoline
stations in each zone. The zones will be reduced in stages and eventually
abolished altogether in October 1996.

5) Electric Utility Industry Law

Under existing regulations, non-electric
utility firms entering into the power wholesale business need to obtain MITI's
permission; however, after deregulation scheduled for fiscal 1996, a bidding
system will be introduced to enable non-electric utility firms to wholesale
power to the ten major electric utilities; moreover, non-electric utility firms
will be free to retail power directly to consumers through the ten major
electric utilities' existing power transmission and distribution systems.

JPNese Investment in Energy Development
Projects in Canada

The following JPNese companies have been engaged in energy exploration and
development projects in Canada =
*--JPN Oil Sands Co., Ltd. (Alberta)
(Canadian Partner: Norcen)
Established in December 1975 with a total capitalization of ¥3,8066 million.
*--Canada Oil Sands Co., Ltd. (Alberta)
(Canadian Partners: Esso Resources, Occ.crp.nrg, Petro-Canada) Established in
December 1978 with a total capitalization of ¥20,710 million to perform a field
test for developing heavy oil recovery technology
*--Arctic Petroleum Corp. (Beaufort Seat)
(Canadian Partner: Amo.crp.nrg Canada)
Established in February 1981 with a total capitalization of ¥48,682
million to provide loans to Dome Petroleum for oil exploration in the Beaufort
Sea. Amo.crp.nrg Canada has been conducting seismic survey and wildcat drilling
operations after the merger with Dome Petroleum in September 1988
*--JPN Canada Oil Co., Ltd. (Alberta)
(Canadian Partner: Petro-Canada). Established by Mitsubishi {Mcb} Oil in
February 1992 with a total capitalization of ¥4,000 million to produce synthetic
oil from open pit mining of oil sands (Syncrude project)
*--JPN UTF Oil Sands Ltd. (Alberta)
(Canadian Partner: AOSTRA)
Established in March 1992 with a total capitalization of ¥170 million to join a
research project of AOSTRA (Alberta Oil Sands Technology and Research Authority)
for heavy oil recovery
*--Idemitsu Uranium Exploration Canada
Ltd. {nrg.a} (Saskatchewan)
(Canadian Partner: CAMECO)
Idemitsu Kosan participated in January 1982 in Cameco's uranium exploration and
development project in Saskatchewan,by acquisition of 12.875% of equity in Cigar
Lake Mining Corp
*--JPNese Steel Companies
(Canadian Partners: Teck Corp./Manalta Coal Ltd.) NKK, Kobe Steel, and
other steel companies have participated in equity of three nrg.c development
projects (Quintette, Bullmoose and Gregg River) in British Columbia and Alberta
to develop nrg.c for xpt to JPN since 1983.

Clinton administration has decided
not to oppose a $1.6 billion ptpt that would carry huge quantities of Central
Asian natural gas across IRN, the first significant easing of the economic
isolatvion of the Tehran regime, according to U.S. officials and other sources.

The
2,000-mile ptpt project, now undertaken with tacit U.S. acquiescence, would mark
IRN's first participation in any major international energy project since the
1979 Islamic revolution there. That upheaval and the seizure of American
hostages led to U.S. sanctions and a long, international campaign by Washington
against IRN's fundamentalist government for allegedly supporting terrorism.

The ptpt
would carry gas from TKMistan on the eastern side of the CSP.S
across a 788-mile
stretch of northern IRN to energy-needy Turkey and, eventually, to Europe. One
official said the Clinton administration does not endorse the ptpt but has
concluded that such a project ``does not technically violate ILSA,'' the 1996
IRN-LBY Sanctions Act.

The law
bars U.S. and foreign investments of more than $40 million in the development of
IRN's energy sector, but does not address ptpt~ carrying another country's gas
or oil across IRN, the official said.

IRN would
reap a portion of transit fees for allowing the gas to flow under its territory,
and sources indicate the ptpt eventually might also transport IRNian gas.

In part,
the administration's decision to go along with the ptpt reflects the heightened
priority now given to helping the independent former Soviet states of Central
Asia assert their independence from Russia. The CSP.S
region holds the largest oil
and gas rzv~ outside the PER.G, but, historically, Moscow has looked on
these resources as a long-term reserve for its own gas and oil needs.

Russia has
been the traditional market for TKMistan's gas rzv~, the world's third
largest. For that reason, a trans-IRNian ptpt would advance a goal of U.S.
policy to provide multiple outlets for Caspian rzv~ that do not run across
Russian territory, U.S. officials noted.

One oil
industry representative likened the complex geopolitics involved in establishing
ptpt routes for the landlocked Caspian treasure to a ``three-dimensional chess
game.''

<>1997au27:Competition For Oil, Gas Could Re-Ignite Rivalry Between Russia, TRKy

University Park PA -- Russia and TRKey, once rivals in the 18th and 19th centuries, may face off again over vast
oil and natural nrg.g rzv~ in the former Soviet Union.

"TRKey and Russia are already
competing for ptpt~ that would carry oil from AZRjan and KZXan and nrg.g from
TKMistan," says Dr. Robert E. Harkavy, professor of political science at Penn
State. "The Russians are trying to pressure those countries, all former Soviet
republics, into putting the ptpt~ through Russia, while AZRjan prefers that the
ptpt go through TRKey. AZRjan does not want Russian control of its oil
resources."

Harkavy and Geoffrey Kemp,
director of Regional Planning Programs at the Nixon Center for Peace and
Freedom, are co-authors of the recent published book, "Strategic Geography And
The Changing Middle East," published by the Brookings Institution Press for the
Carnegie Endowment for International Peace.

[C.ASA TRK AZR]
According to Harkavy, any shift to a fundamentalist Islamic government in
Turkey could lead to a dangerous, spoiler role in Central Asia, where four of
the five new republics are Turkic and look to Turkey as a role model, as do the
Turkish-speaking Azeris of AZRjan.

[BLK.S]
"These reasons, together with the continuing strategic importance of the
Black Sea, bear directly on relations between TRKey and Russia," Harkavy says.
"Turkish-Russian competition over these and other issues has been compared to
the geopolitical competition between Russia and the Ottoman Empire during the
18th and 19th century. Turkey and Russia could again be placed in an adversarial
relationship, with the possibility of military confrontation on the Black Sea
coast."

AZRjan, the sole Commonwealth of
Independent States (CIS) country completely free of Russian forces, has been
faced with increasing pressure from Moscow to join CIS collective security/air
defense arrangements, allow military facilities at Gandja and Gabala, and accept
joint naval patrols of AZRjan's sector of the CSP.S
.

"AZRjan has asked the TRKish
president and prime minister to seek Washington's assistance in resisting the
above Russian demands," says Harkavy.

[ARM N-K]
In the recent past, the clout of the Armenian lobby in Washington has put
distance between the USA and AZRjan, in the context of the struggle over
Nagorno-Karabakh. However, the oil leverage exercised by AZRjan has begun to
tilt matters the opposite way.

The Russian
Trading System (RTS) finally reversed itself from a downward trend and gained
2.9% on the week to close Friday at 497.94. In general, it was a rather stable
week as the market advanced 11 points, 8 of which came on Friday. Day to day
fluctuations remained within a fairly narrow range.

Trading
volumes for the week averaged $61.4 million, quite similar to last week. The
reason for the low volumes seems to be that buyers are still wary of the Russian
market. Foreign funds are busy in their home markets trying to catch domestic
rebounds. Russian investors are hesitant to add to their own positions until a
trend becomes clearer. At the same time, those holding stock are reluctant to
sell. Investors with a long-term approach realize that significant rises and
falls are part of the Russian market. Those who bought during the market's
incredible rise during the first half of the summer have seen the higher levels
and are waiting for prices to bounce back. Those who recently bought shares did
so because prices look cheap at current levels.

Of the
major sectors, the oil industry did the most to help propel the market's climb
this week. Tatneft (TATN) led the charge as it soared 11.8% to $154.
Surgutneftegaz ended the week at $0.23, up 7%, due to a 4:1 stock split.
Nizhnevartovskneftegaz (NZGZ) and Sibneft (SIBN) both gained over 6% to round
out the primary oil gainers. Leading blue chip LUKoil (LKOH) rose 1.4% to
$24.03.

The energy
industry edged forward on the heels of Rostovenergo (RTSE) which gained 4.5% and
Krasnayarskaya Gas (KRSG) which increased 3.4%. Mosenergo (MSNG) crawled 1.1%
higher to close just short of $1.60. Unified Energy Systems (EESR), or UES, was
a minor disappointment as it retreated 0.3% to $0.40.

The
telecommunication sector was down only slightly, but it continues to lag other
leading industries despite having enormous potential. Premier communication
providers Rostelecom (R T K M) and Moscow City Telephone (M G T S) ended in
negative territory closing at $4.20 (-0.2%) and $2420 (-0.8%), respectively. On
the bright side, preferreds for Murmanskelectrosvyaz (MUELP) and
Kalingradelectrosvyaz (ESKLP) jumped 12.4% and 9.5%.

In a move
that surprised many analysts, shareholders from Norisk Nickel (NKEL) changed
their minds and voted not to double capital through a rights issue. The action
was applauded by minority shareholders and foreign investors, as the price for
Norilsk shares rocketed on the news. On Wednesday, however, Norilsk's board
announced that it was planning an extraordinary shareholders meeting in November
to vote on a new rights issue proposal, modified from the one just rejected. As
could be expected, shares of Norilsk Nickel were quite volatile this week,
gaining 2.8% to close the week at $12.35, but ending on a somewhat confusing
note.

ADR
programs continue to be popular among Russian companies. Rosneftegazstroi (RNGS
[Rsn.bdg.crp]), an oil and gas equipment company, launched a level-1 ADR program in
order to improve liquidity and increase its international recognition. Aeroflot
International Airlines will issue level-2 ADRs, covering up to eight% of the
stock. Aeroflot officials also said that the state may auction off 51% of the
company in early 1998. Finally, representatives at Samaraenergo (SAGO) announced
that the company was only in the negotiation stage, but does plan to proceed
with an ADR program, probably level-1.

The Nizhny
Novgorod and Sverdlovsk regions both received credit ratings of BB- from
Standard & Poor's, and their outlooks were declared stable. Nizhny Novgorod is
Russia's third largest city in terms of population and is home to the popular
auto manufacturer GAZ (GAZA). GAZ was actually one of this week's leading
performers as its price jumped 12.8% to $141. The Sverdlovsk Region, located
around the Ural Mountains where Europe and Asia meet, is one of Russia's most
industrialized areas and is well endowed in natural resources.

On Wednesday, Russia officially joined the Paris Club of creditor nations. This
inclusion should help Russia in collecting debts owed to it from the Soviet
Union days of about $37 billion. Repayments could reach $500 to 600 million a
year. Russia is also scheduled to sign a deal with the London Club of bank
creditors on October 6. In addition, President Yeltsin indicated that Russia
would stop borrowing from the International Monetary Fund in 1999. The net
result of these developments is that Russia is likely to receive a re-rating,
thus enabling Russia to obtain cheaper debt on international markets than it can
now. It also reflects increasing confidence in the direction of Russia's
economic reforms.

WHAT TO WATCH: Forecast for week of September 22-26:

Confidence
is slowly but surely returning to the Russian stock market. However, most
investors are first looking to see if the world's leading stock exchanges can
hold on to and then build upon recent gains. If they can, interest will find its
way back to Russia's emerging market as both a means of diversification and an
attempt to obtain the high returns that people are coming to expect from the
Russian market. Whereas downturns in world stock markets are immediately felt in
Russia, upturns in leading world market generally precede bullish tastes in
Russia from 6-10 days. Blue chips should start to rise over the next two weeks.
If this rise in first tier blue chips is accompanied or followed by an increased
interest in second tier stocks, the bulls will not only be on their feet but
will be charging forward.

As they did
last week, oil stocks should continue to be the primary force behind growth in
the market this week. However, until confidence in the Russian market returns to
full force, foreign investors are likely to stick to the safer and more reliable
first tier oil companies like LUKoil (LKOH) and Surgutneftegaz (SNGS), thus
pushing up their prices in modest proportions. Sakhalinmorneftegaz (SKGZ) and
Tatneft (TATN) are also attractively priced and should continue to appreciate.

Unified
Energy Systems (EESR) and Irkutskenergo (IRGZ) appear to be preparing for minor
launches, but could still be a week or two away. Regardless, these two energy
companies were hit the hardest in August and haven't come close to recovering.
As a result their shares appear to be trading at significant discounts. Both
energy companies should at least see moderate rises this week as investors
gradually return to the Russian market.

Telecoms
may remain mixed throughout the week. However, three telecoms look poised for
growth. Ural Telecom (URTC) will move its registrar to Moscow on September 23.
This move should improve liquidity and push the price up somewhat. Ural Telecom
is severely undervalued, even by Russian industry standards.
Murmanskelectrosvyaz (MUEL) could see a jump in its price this week after
announcing a 68% increase in net profits for the first half of 1997 in relation
to the same time period for 1996. The announcement was made late last week, and
the market has been slow to react. Tumen Telecom (TUTE) should benefit from the
anticipation of its ADR program on October 1 and the related road show promoting
the stock that is now underway.

Investors
who are daring, but blessed with patience, should consider buying shares of
Khimprom (HIMC). Basically, Khimprom is in the turn-around stage and has great
possibility for the days ahead. Khimprom is one of Russia's foremost chemical
plants and recently announced joint venture plans with DuPont to develop crop
protection capabilities, a market with tremendous growth potential. Over the
last year, Khimprom has made great strides in climbing out of debt territory and
has spun off un-profitable divisions. Khimprom has the potential to increase
eight to tenfold over the next year. However, despite a listing on RTS-2 and
selling at a major discount, trades in Khimprom are extremely rare, leading to
liquidity concerns.

Making its
debut this week is the RTS-3, which includes forty companies, mainly from the
third tier. In the first stage of operations, trades over the RTS-3 will operate
over an "intra-net" between primary participants and market makers. The
advantage of the RTS-3 is that it will simplify trading in these stocks and
provide solid quotations. Over time the RTS-3 could serve as a point from where
new stocks are introduced to the big market.

This week's
wild card that could help boost stocks is if talks between Russian Prime
Minister Victor Chernomyrdin and US Vice President Al Gore make headway. The
so-called Gore-Chernomyrdin Commission begins this Monday and is expected to
cover a wide range of economic issues. Successful talks should help to improve
investor confidence, and if really successful, could lead to investment
excitement.

<>1997se22:Forbes online [SOURCE]
[Gzz.crp
] "Move
over, Exx.crp.nrg [ID] and Shell.crp.nrg. Russia's
Gzz.crp
wants some of your overseas
markets. Make no mistake: It will probably get them"|>Klebnikov,Paul [ID]|
"Sorcerer's apprentice"|
IN THE CHAOTIC Russian economy nrg.g
producer Gzz.crp
stands out as a model of
good management and operating efficiency.
Unlike Russian oil companies, whose production
dropped after the fall of communism, Gzz.crp
has kept its production relatively stable. "In the 30
years Gzz.crp
has been selling nrg.g to Western
Europe," says Niccolo Uzielli of New
York-based Poten & Partners, "it has never
missed a delivery. It has performed like a Swiss
watch."

Outside of Russia, via the Progress ptpt
from its nrg.g.ggr in Yamburg and Urengoi in northern
SBR, Gzz.crp
delivers $10b worth of
nrg.g annually to consumers in Germany, Italy,
France and other parts of central Europe.

Natural nrg.g is relatively cheap to
produce, and it is environmentally
correct. For these reasons demand
for it is expected to grow much faster
than the demand for oil, especially in Europe and
the fast-growing Asian markets. There is just one
problem: The world has more potential supply
right now than potential demand. For the
European market, Algeria and NOR want to
step up production. With Nigeria and the Middle
East also competing for this market, the last thing
the oil industry wants is more natural gas. Yet
more is precisely what Gzz.crp
has.

It already keeps large amounts of nrg.g
shut in below ground and has pumped
nearly 10% of one year's output
into storage tanks. Yet Gzz.crp
has
announced plans to tap undeveloped
nrg.g.ggr on the frozen Yamal
peninsula in SBR and from there construct a
3,000-mile ptpt to the heart of Europe. If
built, the new ptpt will supplement Gzz.crp
's
current line that runs on a parallel route 400 miles
to the south. "With the Yamal ptpt," says
Gzz.crp
Chairman Rem Vyakhirev, "European
customers will be able to receive Russian nrg.g
from different directions. This increases the
reliability of the system, increases the security
and, as a result, raises the price."

{7ss}
Vyakhirev is being careful not to rile his big
international oil company competitors, but his
meaning is pretty clear: Forget your plans for
expanding in the European market; it belongs to
Russia. "Gzz.crp
is sending a signal to the other
nrg.g companies," says Par Mellstrom of
Moscow-based Brunswick Brokerage. "The
message is: Don't even try producing more nrg.g
from the North Sea or Algeria. We will start
producing from this new field before you start
producing from yours."

To strengthen its foothold in Europe,
Gzz.crp
is moving into the
distribution end of the business. In
Germany it is expanding through a joint venture
with BASF subsidiary Wintershall AG to operate
a nationwide retail nrg.g distribution network in
competition with long-standing Gzz.crp
client
Ruhrgas AG. In Italy it is doing the same thing. In
all, Gzz.crp
has at least two dozen marketing
joint ventures in Europe.

Holding the line

The Russian economy collapsed after
1990, and impoverished domestic
customers could no longer pay for
their gas. But Gzz.crp
kept its
production steady and boosted xpt~.

[TABLE]
Sources MC Securities Lyd.; Brunswick
Brokerage

Further east Gzz.crp
is moving with equal
determination to lock in local markets. It has
taken big equity stakes in distribution companies
in Poland, Belarus, Moldova, Lithuania, Latvia,
Estonia and Finland. Says Mellstrom, "Gzz.crp
wants some of the downstream margin."

To the south, Gzz.crp
recently signed a
$13.5 billion long-term contract to
provide nrg.g to TRKey through a
proposed ptpt under the Black Sea,
and is negotiating a big contract with
Israel for nrg.g from the same ptpt. "We're not
yet a Western-style company," says Vyakhirev.
"But we're getting there."

Located as Gzz.crp
is in the heart of the
Eurasian landmass, its markets are not limited to
Europe and Asia Minor. JPN, KOR and now
CHNa have shown a voracious appetite for natural
gas. Conveniently hard by, Gzz.crp
is the natural
candidate to exploit the giant untapped nrg.g
rzv~ in Yakutsk, Irkutsk, the Altai and other
parts of eastern SBR.

{Mob.crp.nrg [ID]} At
the moment those East Asian markets are
served with liquefied natural nrg.g shipped by boat
from such places as the Northwest Shelf off
Australia and Mobil's giant PT Arun plant in
Indonesia. But it is much cheaper to ship nrg.g in its
natural form by ptpt than to liquefy it and ship
it by boat, and with the exception of JPN, these
markets are contiguous with Russia. There is talk
of a ptpt to CHNa, perhaps to KOR and
even underwater to JPN.

The problem, of course, is money—not
billions but tens of billions of
dollars—and Russia doesn't have
that kind of money. Gzz.crp
netted $1.80b last year on $25.0b in sales, but not all
of that is real money. Vyakhirev says that 95% of
his domestic sales are for barter or in exchange
for IOUs.

In Russia customers pay with ptpt,
drilling equipment, trucks,
chemicals, even sausages and
cabbage. Vyakhirev couldn't cut off deadbeat
customers even if he wanted to: His company is
too important to Russia's economic viability. It
accounts for 6% of Russia's GDP, 17% of its xpts and 26% of the government's tax
revenues. Were it to withhold deliveries from
nonpayers, kindergartens would close, pensioners
would freeze, hospitals and military installations
would be blacked out. "I cannot cut off my
domestic customers," says Vyakhirev. "All of
Russia would be up in arms."

Thus Gzz.crp
has $13 billion in receivables
on its books, half from Russian
electric utilities. It will need
luck to collect even a small part. Another
perpetual debtor is Ukraine, which has run up an
estimated $3 billion in debts to Gzz.crp
.

Bigger than the giant

Gzz.crp
has the gas. Now it needs the
customers.

[Table
shows Gzz.crp
at ca. 40% of total production of world’s great petroleum sisters]
Source MC Securities Ltd.

The Russian government is dependent on
Gzz.crp
, too. Last year 31% of Gzz.crp
's
revenues went to the government as taxes. So
badly does the government need tax revenue that
it does not permit Gzz.crp
to offset its tax
payables against the receivables due from
government customers like state farms, the
military and municipal housing authorities.
Gzz.crp
is expected to stay current on its tax
payments, while its receivables gather dust.

So Gzz.crp
will have to raise money abroad
for its ambitious expansion plans.
A sale of ADRs in London last fall
netted $429 million for 1% of the
company. Since then Gzz.crp
has gotten more
than $4 billion in loans from Western banks. It is
seeking to place over $3 billion in convertible
bonds and Eurobonds, starting in the next few
months.

GO
nrg.g.bxo/Vyakh. In part, of
course, he is a bureaucrat: Gzz.crp
is
so central to the Russian economy that it cannot
function solely as a private business. But make no
mistake: Vyakhirev is fast learning Western
business ways.

And one thing he has learned well: You
go where the money is. With the
domestic market chaotic and
unprofitable, the real money for Gzz.crp
is
overseas. Of that hard fact the oil-producing
world had better take note. "Don't think I will be
puffing up my chest and boasting," says
Vyakhirev, chuckling. "It's like the old fairy tale in
which the little sorcerer says: I am not yet a
sorcerer—I am only an apprentice."

The Russian discount

By Paul Klebnikov

{Gzz.crp
Shell.crp.nrg Exx.crp.nrg [ID]} GAZPROM EMPLOYS 375,000 people and
produces more fuel than any other company in the world =

9.80mB/d.nrg.p equivalent—nearly three times more than RoyalDutch/Shell.crp.nrg, four
times more than Exx.crp.nrg. But at a recent

$47b, its market capitalization is just one-third that of Exx.crp.nrg, one-quarter that of Royal
Dutch/Shell.crp.nrg and about equal to that of Amo.crp.nrg, whose production is a tiny
fraction of Gzz.crp
's

With its ADRs (first offered in October 1996 in London at $15.75) at a recent $19.90,
Gzz.crp
trades at only 7 times last year's operating cash flow, compared with 10 to 12
times last year's cash flow for the Western majors.

The
market, of course, is applying a deep
discount to Gzz.crp
's equity valuation because
of the mess in its domestic markets. The
accompanying table shows some key figures for
Gzz.crp
and other prominent Russian companies
with ADRs outstanding. -P.K.

TKO (Nikkei)-JPN will ask Russia if it
will apply its Production Sharing Law to developing the SBR Koviktinskoye
nrg.g.ggr ca.400km N of IRK, a move that would push forward JPNese companies'
investments, government sources said Tuesday.

JPNese officials will make the request
during a 97no01;02:Krasnoyarsk Summit

JPN National Oil Corp. and 10 JPNese
companies including TKO.nrg.g Co. and Sumitomo {Smt} Corp. are expected to start
a feasibility study in 1998 on the nrg.g.ggr

The primary task involves laying a
3,500km ptpt to Beijing from Koviktinskoye. The area's rzv~ are
estimated at 850bcM, more than 10 times JPN's annual consumption. The
overall project is expected to cost around 1 trillion yen.

<>1997oc21:CHNa, SKOR Show Interest In Russian Natural Gas Project

TKO (Nikkei)-CHNa and SKOR have
expressed interest in purchasing nrg.g to be extracted by a multinational
venture in RUS SBR IRK. Ten JPNese companies are expected to participate in the
consortium, including JPN National Oil Corp. and Sumitomo {Smt} Corp. Interested
parties from JPN, Russia, CHNa and SKOR are set to hold their first meeting on
the project as early as next month.
[IE:997no]

The nrg.g.ggr’s rzv~ are estimated
at some 850bcM. Project managers envisage building ptpt~ to CHNa via MNG, and
plan to eventually extend them to SKOR and JPN.

Both the CHNese and SKORn governments
are reported to have unofficially informed Russia and project participants of
their readiness to purchase some 10bcM.nrg.g each.

Prime Minister Ryutaro Hashimoto is
expected to indicate JPN's readiness to cooperate in the venture to Russian
President Boris Yeltsin when the two leaders meet early next month.

Other JPNese participants include Itochu Corp. and TKO.nrg.g Co.

<>1997oc22:KOR| 10-22-97 : Korea to
Jointly Develop SBRn Gas Field, Pipeline with Three Countries The construction
of a large-scale gas field and ptpt linking the SBRn town of Irkutsk and Pyongtaek,
Kyonggi Province, will be jointly promoted by Russia, China and Japan starting next
month, the Korea Gas Corp. said yesterday. The four countries decided to exchange letters
of intent to develop the SBRn gas field and construct a 4100km-long pipe during a meeting
in Beijing Dec. 15, an official at the corporation said. The construction will emerge as one of
the biggest projects of its kind in the Northeast Asian region. Participating corporations are
the China National Petroleum Corp. (CNPC), Japan National Oil Co.
(JNOC), SIDANCO of Russia and the Korea Gas Corp. The firms are known to have held separate
consultations over the past two years.
The gas pipe
will link Irkutsk in Russia, Ulan Bator in Mongolia, Beijing in China and Pyongtaek near
Seoul. A total of $11 billion will be poured into creating the gas field, which is located 450km
north of Irkutsk, SBR and is known to reserve a total of 760 million tons of natural gas.
Korea and Japanese companies are expected to compete fiercely in investment for
the construction sector, which may amount to 80% of the total stake.
The construction
of the undersea tunnel between Beijing and Pyongtaek is expected to be taken over by
the Korean side under the current circumstances, the official said.
When the gas field is completed, it will be able to provide a total of 20 million tons of
natural gas to China,
Russia and Korea annually for 30 years beginning in 2006, he said. It then will provide 7
million tons of gas annually to Korea during the cited period. With the ptpt's construction,
Korea will be able to acquire natural gas at a price 22 to 25% lower than the import price
of the liquefied petroleum gas (LPG), he said.
The participating companies from Korea include Kohap Inc. Daewoo Corp., Hyosung Corp., Halla
Corp. and LG Corp.

<>1997oc24:RUSSIA TODAY VIDEO|QQN prx Maskhadov,Aslan made sweeping changes in
gvt & also otx-dtr of national Southern Oil Co & planning to split it into 3
cmp~, this just on eve of early CSP.S nrg.p coming down the ptpt frm BAKU|90m of
ptpt is in QQN

<>1997oc24:JPN-Russia To Hold Regular Energy-Related Talks

TKO (Nikkei)-JPN and Russia have agreed
to hold regular talks on general energy-related issues, including assistance to
Russian electric companies and development of natural nrg.g.ggr in far eastern
Russia, JPNese government officials said Thursday. Bilateral meetings will be
held once or twice annually beginning next year to exchange ideas on how to
handle an energy shortage in Asia.

Senior officials with the Ministry
of International Trade and Industry reached a basic agreement on the talks
during a visit to Russia earlier this month. A future topic of debate will
center on the development of a natural nrg.g field in Irkutsk, with plans
for a direct ptpt to JPN. Setting up an engineer exchange program to aid
Russia in upgrading its electric power generation technology will also be on
the agenda.

<>1997oc27:Bonn Delegates OK Easing Emission Goals For Russia, E. Europe
BONN (Nikkei)-Delegates to a meeting
ahead of the global warming [tntn wrl] conference in Kyoto in December agreed to
give special consideration to Russia and 10 Eastern European countries in
setting targets for cutting greenhouse nrg.g emissions, delegate sources said
Sunday. The clause is to be included in a draft protocol to be adopted by the
Kyoto conference.

Under the agreement, Russia and Eastern
European countries would be allowed to choose a year in the 1980s as a base to
calculate reduction targets, set to be achieved around 2010.

The compromise was made because
delegates believe it would be unrealistic for the countries, which are
experiencing economic difficulties, to set energy-saving targets similar to
those for developed nations, which are to be held to a base year of 1990.

If goals are set against a year in the
mid-1980s, when nrg.g emissions peaked in Russia and Eastern Europe, the
reduction ratio would likely fall by around 5%, the sources said.

The delegates earlier agreed that the emission-cutting goals will be imposed on 36 countries and regions,
including Russia and Eastern Europe.

<>1997oc30:Hashimoto To Offer Russia Lower Trade Insurance Rate

TKO (Nikkei)-Prime Minister Ryutaro
Hashimoto will announce a loosening of trade insurance rules for Russia in
regards to JPNese investment when he meets President Boris Yeltsin, government
officials said Wednesday. The two leaders will meet Nov. 1-2 in the SBRn city of
Krasnoyarsk.

The insurance premium - currently the
highest rate is applied for Russia - is expected to be lowered by 43.8%, said an
official of the Ministry of International Trade and Industry. In addition, the
measures are designed so that trade insurance will be provided if the payment is
guaranteed by a Russian private bank rather than the government.

The relaxed rules are intended to draw
investment from JPNese corporations for the renovation of nrg.p.zvdies,
establishment of telecommunications infrastructure, installment of food
processing lines and other projects.

If the loosened measures are applied,
JPNese businesses are expected to reconsider about 70 projects worth $5.18
billion, according to a MITI study. They hope that trade insurance will be
applied to 39 projects totaling $2.17 billion through guarantees by private
banks.

JPN presently sets a limit of $2.9
billion in trade insurance for Russia. However, after Russia's economic
turmoil, JPNese corporate interest in investment in the nation has weakened,
with $1.1 billion in trade insurance unused.

Seven
investors have expressed INX, results of bidding to be announced next year

SAME DAY
news: FRN Mnr1 Jospin,Lionel mtg w/YlcB stressed that "Russia has a full place
in the new European architecture"|Closer ~~FRN-RUS esp. bzn|General need for
"multipolar world" [IE:vs-USA great power hegemonism] and rejected USA attempts
to plc FRN RUS investment in IRN

<>1997no01:Hashimoto To Meet Yeltsin To Improve Bilateral Relations

TKO (Nikkei)-Prime Minister Ryutaro
Hashimoto and Russian President Boris Yeltsin will meet in Krasnoyarsk, eastern
SBR on Saturday, and spend the weekend fishing, enjoying the local saunas, and
wining and dining together, JPNese government sources said Friday.

Hashimoto aims to establish a personal
friendship with Yeltsin during the casual meeting to improve bilateral
relations.

The two leaders last met in June at the
Denver summit of the Group of Seven industrialized nations plus Russia.

Hashimoto and Yeltsin will not table any
formal discussions on the weekend's agenda, the sources said.

The JPNese premier will stay in
Krasnoyarsk for about 24 hours on Saturday and Sunday, the sources said.

Hashimoto believes that nurturing
friendship with the Russian president is essential for any breakthrough in the
current impasse in diplomatic relations between JPN and Russia. The visit will
facilitate candid and in-depth discussions between the leaders of the two
countries, the sources noted.

The JPNese prime minister intends to
hold another informal meeting with Yeltsin, in JPN possibly next spring,
according to the sources.

TKO (Nikkei)- {tpt} Sumitomo Corp. has
received orders for six 100,000 ton class double-hull crude oil tankers
[nrg.p.nvy for NVR] from Novorossiisk Shipping Co. [NVR.tpt.cmp], Russia's
largest shipping company, sources close to the JPNese trader said. The orders
are worth about 30 billion yen in total. The Russian government holds a 25%
stake in the shipping company.

NKK Corp. will build the ships at its
Tsu plant in Mie Prefecture, with delivery scheduled between 1998 and 2000.

Sumitomo Corp. received the first four
orders in the spring, and two more recently. The trading company is seeking
orders for tankers under an arrangement where it extends loans to shipbuilders
to help finance production.

Russian shipping companies are replacing their fleets with double-hull tankers to reduce the risk of oil spills.

<>1997no02:ERG column by Friedman,Thomas "China now major consumer of Middle
East oil" [8x11 nrg] CHN" state-owned nrg.p co bdg "gathering stations" in
KWT [NB! sanguine view of USA rxn.svt at Nixon Center as he contemplates CHN
mlt-plt influence & presence in PER.G; compare with tone of all USA accounts
of RUS presence in C.ASA] "Early
in the next century, Asian need for PER.G oil will far exceed that of the
U.S and possibly even Europe, and it is myopic to think that the major Asian
powers, either individually or collectively, will not want to have a much
greater say in the political arrangements in this region."]

KRASNOYARSK, Russia (Nikkei)-Prime
Minister Ryutaro Hashimoto and Russian President Boris Yeltsin agreed Sunday to
resolve the Northern Territories dispute based on the 1993 TKO declaration and
work toward signing a peace treaty between the two nations by 2000, government
officials said.

Hashimoto and Yeltsin made the agreement
at an unofficial meeting in the eastern SBRn city of Krasnoyarsk on Sunday.

Under the 1993 declaration, the two
sides made a commitment to early resolution of their differences over
sovereignty of the Kuril Islands, but did not set a deadline. This is the first
time they have agreed to a time limit to resolve the contentious issue, marking
a turning point in relations following the restoration of diplomatic ties
between JPN and the former Soviet Union in 1956, the officials added.

Referring to the islands dispute,
Hashimoto told Yeltsin that what occurred in this century should be resolved, if
possible, within this century.

As was the case for the SBRn summit, the
two also agreed to observe a "no-necktie" approach for their informal meeting
set for April in JPN. Hashimoto invited Yeltsin to visit JPN with his family,
and the Russian president expressed his willingness.

Hashimoto,
Yeltsin Agree On Energy Development
In SBR

KRASNOYARSK, Russia, (Nikkei)-JPNese
Prime Minister Ryutaro Hashimoto and Russian President Boris Yeltsin agreed
Saturday to promote energy projects between the two countries and make efforts
to stimulate Russia's market economy. Agreement on the "Hashimoto-Yeltsin Plan"
came during the first round of talks which started soon after Hashimoto arrived
at this east SBRn city for a two-day visit.

The plan underlines the importance
attached to developing energy resources in the Russian Far East. JPNese
companies are interested in developing natural nrg.g.ggr in the region for
supply to JPN, CHNa and SKOR.

Hashimoto and Yeltsin also agreed on the
exchange of visits by top military personnel and joint exercises by naval forces
to deal with maritime accidents.

At the meeting, Hashimoto also
extended JPN's support for a Russian bid to join the Asia-Pacific Economic
Cooperation (APEC) forum, JPNese government sources said.

<>1997no06:RUSSIA TODAY| Berezovskii,Boris will otx soon|97no05:otx-PRX Security
Council|nrv sd if he did rt-plt life, it wld be as scx|Nemtsov,Boris &
Chubais,Anatolii were vs-B|In other news, stt will fxx 16% of Luk.crp.nrg to
cptists,including foreign cptists; also 19% of Slav.nrg.p (RUS-BRUS cmp) will be fxx

1995:nrg.g sales totalled 33.14 TWh [?]
(3.30bcM), which accounts for nearly 10% of Finland's energy consumption. Sales
were up 3.6% on 1994. Out of total sales, industry accounted for 41%, combined
heat and power generation 38%, power generation 10%, and nrg.p.zvd~ and other
use 11%.

Because of scheduled completion of new
natural gas-fired plants, the years 1997 and 1998 are set to see a marked
increase in natural nrg.g consumption in Finland. This growth requires
increasing the transmission capacity of the network. Neste is therefore building
a 50-km-long parallel ptpt, a 32-km-long new ptpt to a client's plant, and three
compressor stations that increase the pressure of natural nrg.g in the ptpt.
This FIM 700 million expansion project will be completed in 1997. In conjunction
with the work going on in Finland, the St. Petersburg-based Russian transmission
company Lentransgaz is building a parallel ptpt towards Finland in the Karelian
Isthmus.

In January 1996, Gasum signed an
additional natural nrg.g supply agreement which raises Finland's purchases of
Russian nrg.g 10% from the 20-year supply agreement signed in 1994. The new
agreement becomes effective in 1998.

Gasum received the 1995 Finnish
Quality Award in industrial series. The award is granted jointly by the
Finnish Society for Quality and the Finnish Foundation for Quality
Promotion.

Saudi Petrochemical Development Co.
(SPDC), the JPNese investment arm for the SaA project, has reached a basic
agreement to make Sharq one of the largest petrochemical complexes in the world,
just ahead of Prime Minister Ryutaro Hashimoto's visit to the country starting
on Saturday.

Sharq will tap into its internal
rzv~ to finance 30% of the estimated costs of 150 billion yen, and take out
loans from the {xpt-mpt bnk} Export-Import Bank of JPN and private banks for the
remaining expenses.

The third-stage production, by late
2000, increase to:

2.44mT
ethylene output capacity

0.75mT
polyethylene capacity

1.35mT
ethylene glycol capacity

Staff
levels at the facility will also be increased to 1,000 from the current 800.

The bulk of the petrochemical products
will be shipped to ASEAN countries, JPN, SKOR and Taiwan.

SPDC is owned 45% by the JPNese
government's Overseas Economic Cooperation Fund with the remainder held by 62
JPNese corporations, mainly Mitsubishi {Mcb} group firms including Mitsubishi
Corp. and Mitsubishi Chemical Corp.

<>1997de01:JPN (LCG) Japan’s third-largest electric utility said Friday that
it now had the country’s biggest thermal power plant. Chubu Electric Power
Co. said it had started up two 243 megawatt units at its Kawagoe plant near
Tokyo, bringing the total capacity of the plant to a whopping 4,700
megawatts.

The
Kawagoe power plant is fueled by liquefied natural gas. The company said it
had no plans at this time to further increase the plant’s capacity. The new
additions brought Chubu Electric’s total capacity to 30,310 megawatts.

<>1997de:naturalgas.com website:

WEUR:
nrg.g use is forecast to increase in Europe

04.1%
per year annualized, or

82.0%
by 2010, in the Enron Outlook. This is due to:

(a) New gas supplies seeing markets in Europe from Russia, the
GBR, NOR, NDR, ALG and other sources

(b) Improving GNP growth in the 1994-2010 period versus the slow growth of the early 1990s

<>1997de09:RUSSIA TODAY VIDEO|RUS & MXO may create orx outside
OPEC|Nemtsov,Boris gt-MXO & discussed need for such a grp to defend INX, but
MXO qin sd this not formal part of irx at this time
\\
*--LOOP on "OPEC"

<>1997de19:RUSSIA TODAY VIDEO|Wbnk announced 2 $600m loans for RUS, one for
structural rfm~ & other for nrg.c investment [NB! not for ptpt or nrg.g.zvd
or the like]

<>1997de30:RUSSIA TODAY VIDEO|USA displeased w/new ptpt opened
de29:TKM-IRN|996:USA lwx claims to be able to penalize any cmp investing
more that $20m in IRN or LBY|Since ptpt
opened now "predates the act" it is exempt, but USA will "monitor" further plans

A
special review of the last 50 years of the Russian gas industry: A unique
history starting in 1947

A
special report on the Russian gas industry written and prepared by the
Chairman and Directors of RAO Gzz.crp
: Successfully integrating into the world
gas market--Russia's contribution to building a new Europe. New trading laws
help market in Gzz.crp
shares to evolve. Gzz.crp
's role in European gas. Advanced
technology is the key to future success - LNG potential and exports - By
Chairman Viakhirev,Rem and directors Semeniaka,AM Rezunenko,VI
Komorov,YuriiA Remizov,VV

History
of the LNG industry: From the very days in the 1930s to the development and
construction of major plants in the Middle East - a unique study, with
selected photographs

Nigeria: Pushing more into gas United Kingdom: Prospect of new policies on
energy

A
project for hydrocarbon tpt, separate from Russia and IRN (see photo on the
cover), through the CSP.S from AZRan to TRKey was presented. This proposal
was a primary issue in negotiations held in AWG between the TRKish Prime
Minister, Mesut Iylmaz, and TKMan's President, [Niiazov,S].

The
meeting confirmed the intentions of both countries to improve bilateral
co-operation in different sectors of economy, especially in oil and gas. The
parties have signed a block of the documents, including a memorandum on
mutual understanding for the nrg.g ptpt through TKMistan-TRKey-EUR and a
memorandum between the Turkish Oil Corporation (TOC) and the Authoritative
Body on Use of Hydrocarbon of TKMistan. The latter document granted the
right to the Turkish partner for exploration and extraction of hydrocarbons
on the Amurdariya coast. In addition, agreements on co-operation for
customs, tourism and environmental protection were signed.

The
first official visit of IRNian President [Khatami,Mokhammad] to TKMan was
not successful, but rather complimentary. Although the IRNian President
attended an opening celebration of the TKMi-IRNan D.ptpt nrg.g, the parties
have not signed an arranged memorandum on long-term co-operation in the
nrg.p and gas sector. In a joint communique signed during the visit, a
desire to develop wide-spread co-operation was briefly outlined.

Nevertheless, Teheran is confident that the route for TKMi nrg.g ptpt will
go through TRKey and, probably, to EUR through IRN. Further development of
this project was expressed in a letter signed in AWG by the ministers of oil
and gas sectors of TKMistan, TRKey and IRN. This letter also charged the
English-Dutch company Shell.crp.nrg to construct a nrg.g ptpt through TKMan, IRN, and
TRKy.

Rtl #2
re. nrg.g

Gas

Russia
Has Broken a Primary Trade Principle,

Thinks
Saparmurat Niyazov

Discrepancies in the prices for TKMi gas were the stumble blocks in
negotiations between the President of TKMistan, Saparmurat Niyazov, and the
Prime Minister of Russia, QdnV.

This
matter was discussed by the governmental delegations of the parties, which
elaborated upon the project of agreement for the tpt of TKMi nrg.g by a
Russian ptpt. As a result, the document was not signed. It was decided that
prices for gas must be agreed on by March of this year before President
Boris Yeltsin's visit to AWG.

According to President Saparmurat Niyazov after the governmental
negotiations, RUS agreed:

1998:fxx

0025.0bcM nrg.g at $32 per 1000cM from the border area of TKMistan. AWG
quoted another price, $41 per 1000cM & sd they would sell 30-40bcM nrg.g to
UKR & EUR. During negotiations, RUS quoted price of $36 per 1000cM, which,
however, did not suit the seller.

Niyazov
sd AWG will insist on its price of $42 per 1000cM in the future. This was
the price for TKMi gas in 1996-1997, when it was tpted by TRAO TKMrosgas.
AWG is confident that this price will be profitable for RUS, who sells it to
UKR at $80 per 1000cM.

Assuming that Russia pays $12 for the tpt of 1000cM within UZBistan and
KZXan, the total price of TKMi gas for Russia will reach $54 per 1000cM.
Moreover, TKMistan believes the method of payment (suggested by Russia) to
be unprofitable: 30% of the gas price will be paid in currency and 70% in
goods.

"Today,
trade has to be civilised and profitable both for Russia and TKMistan,"
stated Niyazov. According to the President, this principle of mutual trade
profitability is a major problem in economic co-operation between the CIS.

Ashgabad and Moscow have one matter left to be solved: the $107m debt
payment of Russia to TKMistan.

1997au:RUS acknowledged $107m debt to AWG, when the official visit of the
President of TKMistan to Moscow was held. After the collapse of the USSR,
when Ashgabad agreed to nullify mutual debts, TKMistan used Russian roubles
equalling $121m before issuing its own currency. Meanwhile, $228 million
belonging to TKMistan was frozen in the Vnesh-econombank of USSR. Thus, a
positive balance owed to TKMistan reached $107 million, which was later
confirmed by Boris Yeltsin. During a meeting with Yeltsin, Saparmurat
Niyazov suggested that Russia deliver goods to TKMistan, although the
schedule for payments has not yet been agreed upon. Even though the parties
agreed to solve the problem by autumn 1997, Ashgabad federal authorities
believe that Russia delays its decision in order to put pressure upon TKMi
officials while negotiating prices for gas.

A
result of the visit of Chernomyrdin to Ashgabad was an agreement to cancel
double taxation for income tax and property. The signatories of this
document were the Deputy Minister of Economics and Finances of Russia, G.
Kuznetzov, and the Minister of Economics and Finances of TKMistan, Matkarim
Razhapov. No agreements for the mutual protection of investments and
consular conventions were signed.

Chernomyrdin orally confirmed the intentions of Russia to take part in the
construction of xpt ptpt from TKMistan-AFG-PAKan and TKMistan-IRN-TRKey-EUR

During
the meeting, Niyazov and Chernomyrdin discussed the positions of both
countries regarding the legal status of CSP.S.

At
present, Ashgabad adheres to the position of dividing the CSP.S
according to
condominium principles, where a 45-mile area is left in the jurisdiction of
each country with the remainder being neutral where countries can work on a
priority basis. Both parties admitted the necessity to intensify the
adoption of conventions concerning the legal status of the CSP.S
. The parties
also agreed that any unilateral moves to develop sea rzv~ will be deemed
unreasonable and each adopted decision in this connection must be agreed to
by all Pri-Caspian countries. The parties decided that during the visit of
Yeltsin to Ashgabad in the spring of this year, the legal status of the
Caspian will be considered. In the meantime, the heads of all Pri-Caspian
states will be invited to Ashgabad when the status of the CSP.S will most
likely be determined.

It is
necessary to note that, although Ashgabad and Moscow have similar positions
on this matter, it is suitable for TKMistan to conduct sector divisions of
the CSP.S as Baku insisted. In the opinion of Niyazov, "the CSP.S can be divided
by sectors within a 45-mile area if all Pri-Caspian states agree. The rest
should be neutral." One high-ranking official from the TKMi government did
not exclude the possibility of changes in the TKMistan position related to
the CSP.S status. Much will depend on the decision of AZR concerning the
determination of a medium-line of the CSP.S
. At the end of January, a joint session of the TKM-AZR commission will be held.

On January 13, 1998, President Niyazov issued a decree. In accordance with
this, an authoritative expert group for bilateral negotiations on the
determination of a medium-line was created and ranges of jurisdiction for
TKMistan and AZRan in the CSP.S were set up. The group consists of 11
representatives including Vice-Premier of the TKMi government, Batyr
Sardzhaev, leaders from the Ministry of Oil and Gas Industry and Mineral
Resources, the state corporation TKMgeologiya, the State Committee on
Geodesy, Cartography and Land-Survey, the Ministry of Natural Use and
Environmental Protection, Ministry of Internal Affairs, the State Committee
on Fishery, the Chief Department of State Frontier Service, the TKMi Sea
Steam-Navigation, and the Ministry of Justice.

According to foreign experts, the results of negotiations between Niyazov
and QdnV confirmed the fact that today, TKMistan adheres to an independent
position from Russia concerning {nrg.p & nrg.g ptpt} hydrocarbons tptation
and the general development of the oil and gas sector. AWG does not regard
xpt nrg.g routes as strategically important. Niyazov does not consider
Russia a strategic partner for TKMistan and has sought-out alternative ways
for hydrocarbon raw materials tptation to world markets. IRN is its primary
confederate (where natural gas is delivered), in addition to TRKey and the
USA, agitating Niyazov for a Trans-Caspian ptpt through the CSP.S and AZRan
to TRKey and EUR.

Niyazov's position on negotiations with Yeltsin will depend primarily upon
results of other meetings which will be held earlier. 998ja,e:UKR prx
Kuchma,Leonid will visit Ashgabad.
998fe:TRKey prx, Suleiman Medirel, will visit. They are to discuss
matters of natural gas delivery and construction of ptpt. 998fe:Official
visit of Niyazov to the USA is planned.

WDC
actively tries to persuade Ashgabad to improve its economic independence
from Russia, especially in the nrg.p and nrg.g sector.

<>1998ja23:RUSSIA TODAY VIDEO|Gzz.crp
&
Luk.crp.nrg frmed consortium last year w/ Shell.crp.nrg
to bid for stake in Rosneft Oil Co but now may not|Original stt plan was to
auction 75% of Rosneft shares +1, but now sd 50% only

<>1998ja21:TRK (LCG) Agreements were signed in Ankara yesterday for
construction of two power plants in Turkey by two U.S.-led consortia. The
agreements for the two deals, worth about $210m, were signed during a visit
by U.S. Commerce Secretary William Daley who has been pressing for a larger
USA share of Turkey’s planned $30b power expansion over the next 10 years.

The
Commerce Department has identified Turkey as one of the world’s 10 most
promising markets and Daley wants to make sure that U.S. companies
participate. He is accompanied on his tour of Turkey, the Czech Republic and
Greece by officials of about 25 U.S. corporations, including several energy
firms.

Under
one of the accords signed yesterday, U.S. company TAD LLC, along with
Turkish partners, will develop a $163.5 million natural gas-fired project in
Elkisehir in central Turkey. In the other deal, worth $46.5 million, Ormat
International of the U.S. and its Turkish partners will develop a geothermal
plant in Aydin in southwestern Turkey.

The
Turkish government has said it plans to first modernize and then privatize
several existing power plants. U.S. companies will be among the bidders on
those projects, both for construction and to take the plants over and
operate them.

INTRO:
TURKEY HAS FAILED TO SECURE A FIRM COMMITMENT FROM STATES BORDERING THE
CSP.S
TO EXPORT OIL AND NATURAL GAS TO WESTERN MARKETS VIA TURKEY.
IN A JOINT DECLARATION ISSUED MONDAY AT THE END OF A TWO-DAY
CONFERENCE IN ISTANBUL, THE FOREIGN MINISTERS OF TURKEY, KAZAKHSTAN,
TKMISTAN, GEORGIA, AND THE DEPUTY FOREIGN MINISTER OF AZR EMPHASIZED THE
NEED FOR SEVERAL PIPELINES TO EXPORT CASPIAN OIL AND NATURAL GAS.
BUT AS AMBERIN ZAMAN REPORTS, THEY DID NOT SINGLE OUT TURKEY AS THE
MAIN EXPORT ROUTE.

TEXT:
FOR ANKARA, THE OUTCOME OF THE TWO-DAY CONFERENCE IN
ISTANBUL FELL SHORT OF ITS EXPECTATIONS -- THAT IS, TO GET THE PARTICIPANTS
TO AGREE ON SINGLING-OUT TURKEY AS THE MOST DESIRABLE EXPORT ROUTE FOR CASPIAN OIL AND NATURAL GAS.

TURKEY
HAS BEEN WAGING AN AGGRESSIVE DIPLOMATIC CAMPAIGN TO PERSUADE CENTRAL ASIAN MUSLIM STATES OF THE FORMER SOVIET UNION, ALONG WITH
NEIGHBORING AZR, TO EXPORT THE BULK OF ITS VAST OIL AND NATURAL GAS rzv~
THROUGH A PROPOSED PIPELINE NETWORK [CYN.ptpt] RUNNING FROM THE AZRI CAPITAL BAKU TO
LOADING TERMINALS AT THE PORT OF CEYHAN ON THE TURKISH MEDITERRANEAN COAST.

BUT
TURKEY HAS ENCOUNTERED STIFF OPPOSITION FROM RUSSIA -- ITS REGIONAL RIVAL.
RUSSIA REMAINS THE MAIN OUTLET FOR CENTRAL ASIAN AND AZRI OIL AND GAS
EXPORTS, FLOWING THROUGH A NETWORK DATING BACK FROM SOVIET TIMES.
ANALYSTS SAY MOSCOW FEARS ITS INFLUENCE OVER ITS FORMER DOMINIONS
WILL DIMINISH, SHOULD THEY CHOOSE ALTERNATIVE ROUTES TO EXPORT THEIR VAST
ENERGY rzv~ WHICH ARE ESTIMATED TO RIVAL THOSE OF THE MIDDLE EAST.

THE
UNITED STATES IS ENCOURAGING WHAT ITS OFFICIALS DESCRIBE AS A "MULTIPLE
PIPELINE STRATEGY." THEY ARGUE THAT BY DIVERSIFYING EXPORT OPTIONS, THE
FORMER SOVIET STATES WILL FURTHER CONSOLIDATE THEIR INDEPENDENCE.
WASHINGTON, THEREFORE, CONTINUES TO STRONGLY SUPPORT THE CONSTRUCTION
OF THE PROPOSED BAKU-CEYHAN ROUTE AS PART OF THAT STRATEGY.

BUT
ANALYSTS SAY THAT THE OIL EXPORTING COUNTRIES THEMSELVES NEED TO BE
PERSUADED OF THE MERITS OF ANY PIPELINE ROUTE THAT RUSSIA OPPOSES.
THEY POINT OUT THAT KAZAKHSTAN, IN PARTICULAR, APPEARS RELUCTANT TO
UPSET MOSCOW. THE KAZAKH
FOREIGN MINISTER TOLD THE ISTANBUL CONFERENCE THAT THE BAKU-CEYHAN ROUTE
WAS, IN HIS WORDS, "COSTLY AND COMPLICATED" AND THAT HIS COUNTRY WANTED TO
EXPORT ITS CRUDE OIL THROUGH A PROPOSED PIPELINE RUNNING TO RUSSIA'S BLACK
SEA PORT OF NVR.

//REST
OPT// FOR NOW, THE BULK OF OIL
PRODUCED IN RUSSIA AND THE FORMER SOVIET STATES IS TRANSPORTED BY TANKERS
WHICH USE TURKEY'S BOSPHORUS AND DARDANELLES STRAITS TO REACH FOREIGN
MARKETS.

CITING
ENVIRONMENTAL AND SAFETY CONCERNS, ANKARA SAYS THAT THE STRAITS CANNOT
HANDLE THE EXPECTED INCREASE IN TANKER TRAFFIC, ONCE COUNTRIES LIKE
KAZAKHSTAN AND AZR START PRODUCING MORE OIL.
RUSSIA, IN TURN, ARGUES THAT SHOULD TURKEY TRY TO LIMIT TANKER
TRAFFIC THROUGH THE STRAITS, IT WOULD BE VIOLATING THE 1936 MONTREUX
CONVENTION WHICH GUARANTEES FREE PASSAGE OF ALL COMMERCIAL TRAFFIC THROUGH
THE STRAITS.

AGAINST
THIS BACKGROUND, ANALYSTS SAY TURKEY WILL HAVE TO DO A LOT MORE CAMPAIGNING
BEFORE IT CAN FULFILL ITS LONG-CHERISHED GOAL OF BECOMING THE MAIN TRANSIT
ROUTE FOR CASPIAN OIL AND NATURAL GAS.
THEY ADD THAT THE ISTANBUL CONFERENCE IS A POSITIVE STEP IN THAT
DIRECTION. (SIGNED)

SLONIM,
Belarus - Russia's natural gas monopoly Gzz.crp
will wait at least six to seven
months before selling the next tranche of its American Depositary Receipts,
said [Viakhirev,Rem] the company's president.

Vyakhirev, speaking at a ceremony Wednesday to open a section of a natural
gas ptpt that will bring Russian supplies to Europe via the former Soviet
republic of Belarus, said that the market price of Gzz.crp
shares was too low.

"Political instability in Russia has affected the shares, and for investors,
the price of instability is important," he said.

A Gzz.crp
official who declined to be identified said that Gzz.crp
would seek to sell its
shares at a price three to four times higher next time around, with each
share commanding a price of no less than $5.

Gzz.crp
American Depositary Receipts, or ADRs, were quoted at $19.475 at midday in
London, off highs of $19.825 but above Tuesday's close of $18.50.

Each
ADR, which represents 10 underlying shares, was initially priced at $15.75
late on Monday.

ADRs,
which must meet specifications of the USA Securities and Exchange
Commission, allow foreign investors to buy dollar-denominated shares in
Russian companies while avoiding Russia's cumbersome custodial and
settlement system.

Vyakhirev said that the London Stock Exchange was scheduled to start trading
the paper on Oct. 28.

The ADR
issue of 1% of the firm's total stock was originally valued at $373.3
million by Gzz.crp
. The initial placement of stock was five times
oversubscribed at the offer price and Gzz.crp
is considering putting a further
0.15% of its stock on sale to satisfy demand.

The
ptpt section on which work started Wednesday is a small but key part of
Gzz.crp
's ambitious, $40b Yamal-Europe project.

The
project, when fully complete, will carry huge supplies of Russian gas from
the Yamal Peninsula in the Arctic to Germany and beyond via Belarus and
Poland.

Thousands of workers took to the streets in Russia's Far East on Thursday as part of a
nation-wide day of protest. About 4,000 people marched in Vladivostok, although
early reports suggest that many workers have chosen to stay home. Things turned
political in the Far East, as demonstrators called for Yeltsin to resign and
supported a Communist demand for a coalition government. Labor leaders, who have
come out in support of Yeltsin's nominee for prime minister, Kirienko,Sergei had
asked that the protests remain non-political, focusing on the nonpayment issue.
For more on the nation-wide day of protest, see Russia Today's top stories.

LABOR THROWS ITS SUPPORT BEHIND KIRIENKO

The backing of labor leaders is seen as a good sign for Kirienko, but it still seems
unlikely he will be approved by the Duma on the first vote. The acting prime
minister will present his plan for the economy to Duma deputies on Friday, after
which they are expected to hold the first of what could potentially be three
votes. Communist leader Gennady Zyuganov continues to oppose Kirienko and will
seek a change in the voting rules to avoid a secret ballot on Friday. Yeltsin's
own representative in the lower house, Aleksandr Kotenkov, has admitted it is
unlikely Kirienko will be approved this week.

YELTSIN TO VISIT CHERNOMYRDIN ON FORMER PM'S 60TH

Russian President Boris Yeltsin is expected to visit former Prime Minister Victor
Chernomyrdin on Thursday for Chernomyrdin's 60th birthday. The president sacked
the premier last month, after criticizing him for failing to solve the country's
wage arrears crisis. Chernomyrdin has announced his intention to run for
president and received only lukewarm support from Yeltsin. On Tuesday, however,
Russian media and financial tycoon Boris Berezovsky advised the Russian business
community to support Chernomyrdin in 2000.

LUKoil, MOSCOW DEAL CREATES MAJOR NEW OIL SECTOR PLAYER

An agreement signed in Moscow on
Wednesday has created an important new player in
the Russian oil industry. The deal was inked by Moscow Mayor Yury Luzhkov and
the president of LUKoil. Also in attendance were the President of the oil-rich
Tatarstan region, the head of the region's Tatneft oil company and the head of
the Central Fuel Company. The five have not formed an official consortium, but
Tatarstan and LUKoil have each bought 13% of the Central Fuel Company, of which
the City of Moscow already owns 38%.

<>1999mr25:Yugoslavia attacked by USA-led NATO air power,
an act with some roots in energy politics [SAC]

<>1999de:Kyoto Protocols signed [ecx]
*--ExxM.crp.nrg worked strenuously to neutralize these Protocols
*--ExxM.crp.nrg CEO Raymond,Lee led effort to deceive the world about a scientific
critique of Kyoto, signed by many thousand "scientists" [Coll.PRIVATE:80-9]

<>2000:USA-RUS espionage employed "top spy"
Sergei Tret’iakov [TtkSrg] as a double agent until this year when he defected to USA
*1995:2000; TtkSrg was deputy head of UNO mission| He told story about how his
agents helped the RUS gvt "steal nearly $500 million from the UNO’s oil-for-food
program in IRQ before the fall of Saddam Hussein in 2003"| TtkSrg "oversaw an
operation that helped Saddam’s regime manipulate the price of Iraqi oil sold
under the program -- and allow Russia to skim profits
\\
*2008ja27:ERG story with these and other claims was occasioned by the publication of TtkSrg’s
book at this time| Hard to justify ERG headline = RUSSIA FINGERED IN OIL-FOR-FOOD SCAM]

<>2000ap06:IREX is pleased to welcome Mr. Franz B. Ehrhardt, Dr. Sarah Pratt, and
Mr. Kurt A. Wimmer as new members of its Board of Governors.
Mr. Franz B. Ehrhardt is President and Managing Director of Conoco EurAsia Inc., located
in Istanbul, Turkey. His responsibilities include the coordination and the
development of Conoco's entire range of energy interests in the EurAsia Region.

He has held various positions including General Manager of Marketing, Conoco Germany,
Coordinator Worldwide Marketing, President of Conoco's US Retail Marketing
Company, Managing Director of DuPont Scandinavia, and Executive Management
Consultant for New Business in Asia. A multilingual native German, he completed
his education in Mining Engineering and Business Administration in Germany, as
well as at the Harvard Business School. His total career in the oil industry
spans over 40 years.

Mr. Ehrhardt has been very actively involved in the world of Applied Creative
Thinking. He served on Dupont's Advisory Board for Creativity and Innovation, he
is a member of the board of the American Creativity Association, and he is a
certified instructor of various creative and provocative thinking concepts.
During his entire career, he has very successfully applied creative thinking
techniques.

Additionally, he has a very close association with academia. This includes
service on the development and advisory boards of a number of universities. Mr.
Ehrhardt had various teaching assignments as executive in residence, visiting
professor, and adjunct professor. His lecturing activities included many
different countries.

Mr. Ehrhardt joined the IREX Board in fall 1999 and has been instrumental in working
with staff on Caspian and Black Sea initiatives.

<>2000au24:NOR, STAVANGER | Gazprom Flexible on European Pipeline Plans --
(Reuters) Russian giant Gazprom , which sits on
approximately one quarter of the world's natural gas rzv~, is in no rush to
build new ptpt~ to fill "overestimated" European demand, a company executive
said on Thursday.

"If there will be bigger demand, we'll construct it. If not, we'll wait. We're not in a
hurry," Gazprom board member Yuri Komarov told Reuters on the sidelines of the
Offshore Northern Seas conference.

"It is not clear when the time will come. The market forecast for gas consumption in Europe
was overestimated."

PIPELINE PLANS COMPETE

Gazprom has set several potential ptpt projects in motion in order to diversify its route of
supplying gas to western Europe, which depends on Russia for about 25 percent of its demand.

Currently, 90 percent of deliveries are shipped through the Ukraine, but Kiev owes Russia billions in back
energy debts. "Unfortunately they're not a reliable transporter," said Komarov.

The most distant planned alternative route crosses the Baltic Sea with help from
Finland's Fortum at an estimated cost of about USD 10 billion. But it remains at
least 10 years off, according to the Finnish company.

Poland offers good access and plans are underway to complete the Yamal ptpt, half of
which was finished last year with a capacity of about 32 billion.

Another proposal is to extend the Yamal with a southern link to serve Slovak and Czech
customers, an idea Poland has rejected, citing potential damage to its relations with
Ukraine. But Komarov said that in the end, economics would dictate which plan prevails.

"There are competing projects. The one that gives us better conditions will be built. This
is quite important to Poland as well, as they will get funds from the transport," he said.

One project that now seems certain is the so-called "Blue Stream" ptpt that will send gas
beneath the Black Sea to Turkey. Gazprom is building the 16 billion cubic meter
capacity pipe with Italy's ENI. "Next year we will start deliveries. We have
already started construction."

NO SHAKE-UP SEEN

Komarov said he did not expect the Russian government to seek a major shake-up of one of
its key cash cows, even as the Kremlin moves to rein in some of the oligarchs
that control much of the nation's industry.

"I can't imagine any big changes... We bring in a lot of profits. For sure the government
wants to keep the company in good health," he said. Gazprom is always seeking
efficiency, but will remain a vertically integrated monopoly, he added.

Plans to end restrictions on foreign ownership of Moscow-listed Gazprom shares - tearing
down the fence that separates them from the ADRs, considered a major touchstone
- are under evaluation but depend on "many subjects", Komarov said.

He also sees no need to reevaluate the company's relationship with Itera, a transporter
and distributor in many of the ex-Soviet states. Some analysts fear Gazprom
value is being transferred to Itera.

"We have only a business relationship. They serve a very complicated client market, it's
not a usual business from the Western point of view," said Komarov. "It's clear
that Gazprom couldn't manage the market alone."

<>2000au28:DOLINSK, Russia,
Aug 28, 2000 -- Soviet Dreams Shattered in Russia's
Far East (Agence France Presse) Anger was palpable Sunday among the unemployed
in this bare and forgotten town once meant to be the oil capital of Russia's Far
East, but now a frightening show of Soviet miscalculation.

Forty kilometers (25 miles) north of [>YSXL] Yuzhno-Sakhalinsk, the capital of
Russia's oil-rich SXL Island lies, many here agree, a dead zone which people
would prefer to escape, if they could.

Unemployment is rife among the young, while many of those with any job at all
are paid trivial salary months late -- if ever.

"1993 was the end, that was when they put a gravestone on this town," said 30-year-old
army sergeant Alexander Mirnov, his lips trembling as he spoke.

"Ten years ago you could still get out of here, now we're stuck for good," he added
despairingly.

In Communist times, wind-swept Dolinsk was actually an attractive place to live,
drawing enthusiasts from all over the Soviet Union with promises of rich pay
checks from a giant cellulose plant.

A small town nestling among olive-green hills, waves pleasantly lap against the shore at
Dolinsk, on the Sea of Okhotsk coast.

But now its ugly concrete Soviet-era buildings are a prison for the unhappy 15,000
residents, desperately trying to make ends meet.

"We're not living, we're surviving," said Roman, 50, who spent two decades working together
with his wife in the Celulosny Bumagny Kombinat.

Money from SXL's oil and mineral resources seems to flow into the coffers of Western
multinationals and Russian oil majors in boomtown Moscow -- instead of being
ploughed back into the impoverished island, locals insist.

"We could be another KWT. We have oil, gas, fish and coal, but what benefits do we ever
see from this?" demanded Nina Ivanovna, 41, who held a senior post in the
cellulose plant.

In 1991, just after the Soviet Union collapsed, a large Japanese firm offered to buy the
factory, she said, but was turned down by the government in Moscow.

At the entrance to the abandoned site, a tired notice board still proudly proclaims how
the plant, founded by a Japanese company in 1917, was reclaimed in 1945, when
the Soviets seized SXL.

It then shows production plans being fulfilled as output rises inexorably, reaching
82,000 tons in 1990 from 14,000 tons in 1946, with exports going to China,
Vietnam and North Korea.

But suddenly, the picture is subverted as graphs illustrating a steady rising line
suddenly plunge towards zero -- a mere 2,100 tons by 1995.

An eerie silence envelops the chimneys and tall factory buildings where once nearly 2,000
workers congregated every day. "Peace. Work", the slogan written on a wall
proclaims mockingly.

Ivanovna, a senior worker at the coal-fired power station that provides the town with
heating, said she had not been paid properly for several years.

She is still owed RUR 35,000 (USD 1,250, EUR 1,400), about one year's pay.

"Last year I went to Moscow, I saw how they've spruced the place up. But living here I
can't even buy a coat for winter," she said.

Valentina, a toothless 50-year-old still employed to guard the factory entrance, listlessly
peeled potatoes as she boiled some tea in her tiny cabin.

Taken on at the plant when she was 18, she said she hadn't received any salary for the past
three years. Instead she is given milk and bread.

Yet the worst anxiety for all is that the next generation will be trapped in this same
life.

"Our 19-year-old son is coming back from his army service. What is he going to do? He
wanted to be a computer programmer but we can't afford to pay for him to study,"
one mother said, betraying little hope. ((c) 2000 Agence France Presse)

Talks between the two men focused on next year's five-nation Caspian meeting of deputy
foreign ministers from AZR, IRN, KZX, RUS and TKM to be held in Tehran.

"Today, we set a deadline for the summit," Kalyuzhny told the news agency, adding that the
meeting would take place at the end of January or beginning of February [2001ja:
or 2001fe:].

IRN had postponed the international summit several times citing disagreements between
the five countries on the future status of the CSP.S

"Significant progress was made during our meeting and Akhani confirmed IRN's
readiness to take part in multilateral consultations on the Caspian problem,"
said Kalyuzhny.

He also said that Tehran had supported Moscow's proposal to tie regulation of the
CSP.S to shipping and the support of bio-resources.

The CSP.S's hydrocarbon resources, considered the world's richest after those of the PER.G
and SBR, are the object of fierce rivalry between the five states.

The division of the Caspian's waters has never been formally clarified, with the
result that the rival nations continue to dispute the share-out and exploitation
of its natural resources.

In the past, IRN has accused AZR of being too friendly to the United States and Israel
because of its success in securing a number of major energy contracts with
foreign firms since the breakup of the Soviet Union.

The planned summit could play "a major role in concluding efforts to define the (legal)
status of the CSP.S," Russian Foreign Minister Igor Ivanov said earlier.

The head of the Russian parliamentary defense committee, Andrei Nikolayev, said last week
after a meeting with IRN's ambassador to Moscow, Mehdi Safari, that IRN was also
considering allowing Russia access to the NDN.O, ITAR-TASS reported.

Russian Defense Minister Igor Sergeyev is planning to travel to Tehran in late December
or early January to discuss military cooperation projects estimated at some
seven billion dollars, the news agency said.

Moscow announced last month it was scrapping a five-year-old agreement with Washington
that banned conventional arms sales to IRN, a decision that prompted a White
House warning that trade ties could suffer as a result. ((c) 2000 Agence
France Presse)

<>2000de15:KZX Almaty| See website favorite dms: Transcaspian Project. During his
speech in the Kazakh parliament a few days ago, the president of the National
petroleum company (NPC) "Kazakhoil" Nurlan Balgimbayev focused on questions of
financial-economic activities concerning his company, particularly, on policy
distributing NPC "Kazakhoil" dividends, pricing and sale of petroleum in the
region with a preferential mode of taxation (offshore), and on problems of
providing the home market with petroleum.

Taking into account, that the world market prices are variable, the company conducts a policy of maximum
usage of favorable conjuncture for financing the programs for recovering the main production assets,
increasing oil recovery, realizing indispensable volumes of hole cutting.

In case if oil extracting continues without investments (at withdrawal of the dividends),
"Kazakhoil" forecasts that by 2005 the production of petroleum is to decrease
from 5,7 million Tons in the current year down to 1,9 million Tons (more than in
3 times comparing to the level of 2000), has declared Nurlan Balgimbayev.

When the company was created, the production facilities of the oil producing enterprises
were, to put it mildly, in a worn state. In conditions when the world prices on
petroleum were falling down in 1998 and beginning of 1999, when the price has
gone down to 9-10 dollars for barrel, the company was compelled to reduce the
investments on major repairs of its basic funds. Therefore, "Kazakhoil"
considers its primary objective to recover its industrial power.

The statement of official structures about short-reception of money due to sale of
raw material undercharged to petroleum companies, among which "Kazakhoil", is
not true in opinion of the NPC experts. Taking into account the transport costs,
the difference between the adopted "world price" index and the true selling
price of petroleum is around 40-50 dollars for ton.

Speaking about the sale of Kazakh petroleum to companies registered in Offshore zones,
the experts mark that during the sale of petroleum for export, the sales
contracts are concluded consist only with solvent companies capable to purchase
hydrocarbon according to international price. The registration in offshore zones
is determined by the fiscal policy of the buyer and has nothing to do with the
fiscal structures of the exporting country, in this case - Kazakhstan.

Nurlan Balgimbayev is convinced, that NPC "Kazakhoil" completely manages its
obligations on loading Kazakhstan refinery. The fulfilling of the obligations to
deliver petroleum for the home market makes today about 107 percent from the
plan affirmed by the Ministry of energy, industry and trade.

Being an operator of 18 percent of the petroleum, extracted in the republic, "Kazakhoil"
plans to deliver Kazakhstan refinery 1.9 million tons of petroleum in by the end
of this year. It makes approximately 28 percent from the total amount of
deliveries to home market by all the oil producing enterprises in the republic.

"actions regarding the capture of new and existing oil and gas fields"

Widely thought that Cheney consulted in secret with Big Oil CEOs

<>2001se11:NYC World Trade Center, the WDC Ptg
and other sites targeted for coordinated Al Qaeda terrorist attacks in the form of suicidal (and murderous)
"kama kazi" aerial crashes
*--Bw2 administration officials diverted their attentions from this and quickly took up
their long-term ambition = attacking IRQ [M.crn]

<>2001oc11: A subject that I hear has been on your mind.
(email from Bob Arnold)SOURCE=
MISSING THE OIL STORY | AUDIO and TEXT| Nina Burleigh has written for The Washington Post, The
Chicago Tribune, and New York magazine. As a reporter for TIME, she was among the first American
journalists to enter IRQ after the Gulf War. Her words =

Recently I attended one of those legendary Washington dinner parties, attended by British
cosmopolites and Americans in the know. A few courses in, people were gossiping
about the Bush family's close and enduring friendship with the SaA ambassador,
Prince Bandar, dean of the diplomatic corps in Washington. By the end of the
evening, everyone was talking about how the unfolding events were going to
affect the flow of oil out of Central Asia.

I left wondering whether 6,000 Americans might prove to have died in New York for the
royal family of Saud, or oil, or both. But I didn't have much more than insider
dinner gossip to go on. I get my analysis from the standard all-American
news outlets. And they've been too focused on a) anthrax and smallpox, or b) the
intricacies of Muslim fanaticism, to throw any reporters at the murky ways in
which international oil politics and its big players have a stake in what's unfolding.

A quick Nexis search brought up a raft of interesting leads that would keep me busy for 10 years
if the economics of this war was my beat. But only two articles in the American media since
September 11 have tried to describe how Big Oil might benefit from a cleanup of terrorists and
other anti-American elements in the Central Asia region. One was by James Ridgeway of the
Village Voice. The other was by a Hearst writer based in Paris and it was picked up only in the
San Francisco Chronicle.

In other words, only the Left is connecting the dots of what the Russians have called
"The Great Game" [?] -- how oil underneath the 'stans' fits into the new world order. Here's
just a small slice of what ought to provoke deeper research by American reporters with resources and talent.

Start with father Bush. [BshGH & Crl.grp] The former president and ex-CIA director is not
unemployed these days. He's been globe trotting as a member of Washington's Carlyle Group, a $12 billion private
equity firm which employs a motorcade of former ranking Republicans, including Frank Carlucci, Jim Baker and
Richard Darman. BshGH senior and colleagues open doors overseas for The Carlyle Group's "access capitalists."

Bush specializes in Asia and has been in and out of SaA and KWT (countries that
revere him thanks to the Gulf War) often on business since his presidency.
Baker, the pin-striped midwife of 'Election 2000' was working his network in the
'stans' before the ink was dry on Clinton's first inaugural address. The Bin
Laden family (presumably the friendly wing) is also invested in Carlyle.
Carlyle's portfolio is heavy in defense and telecommunications firms, although
it has other holdings including food and bottling companies.

The Carlyle connection means that George Bush Senior is on the payroll from private
interests that have defense business before the government, while his son is president. Hmmm.
As Charles Lewis of the Washington-based Center for Public Integrity has put it,
"in a really peculiar way, BshGW could, some day, benefit financially from his own
administration's decisions, through his father's investments. And that to me is a jaw-dropper."

Why can we assume that global businessmen [tntn.ekn] like Bush Senior and
Jim Baker care about who runs AFG and NOT just because it's home base for lethal
anti-Americans? Because it also happens to be situated in the middle of
that perennial vital national interest -- a region with abundant oil. By
2050,Central Asia will account for more than 80 percent of our oil.

2001se10:OGJ, an industry publication, reported that Central Asia represents one
of the world's last great frontiers for geological survey and analysis,
"offering opportunities for investment in the discovery, production,
transportation, and refining of enormous quantities of oil and gas resources."

It is assumed we need unimpeded access in the 'stans' for our geologists, construction
workers and ptpt~ if we are going to realize the conservation-free [enx.c], fsl-fueled
future outlined recently by Vice President Cheney. A number of ptpt projects to
carry Central Asia's resources west are already under way or have been proposed.
They would go through Russia, through the Caucasus or via Turkey and IRN. Each
route will be within easy reach of the Taliban's thugs and could be made much
safer if America [USA] vanquishes Muslim terrorism.

There's also lots of oil beneath the turf of our politically precarious newest best
friend, Pakistan. "Massive untapped gas rzv~ are believed to be lying
beneath Pakistan's remotest deserts, but they are being held hostage by armed
tribal groups demanding a better deal from the central government," reported
Agence France Presse just days before September 11.

So many business deals, so much oil, all those big players with powerful connections to
the Bush administration. It doesn't add up to a conspiracy theory. But it does
mean there is a significant MONEY subtext that the American public ought to know
about as "Operation Enduring Freedom" blasts new holes where ptpt~ might someday
be buried.

This is Nina Burleigh for TomPaine.com.
Web sites related to this article: Center for Public Integrity
Copyright 1999-2001 The Florence Fund

While Russia's LUKoil prepares to take a stake in the Baku-CYN.ptpt in March, the Russian government
has yet to give its public approval for the deal. Moscow may have tacitly allowed negotiations to go
ahead, but some officials are making it clear that they still oppose the move.

Boston, 27 February 2002 (RFE/RL) -- Even with a deal in the works, Russia continues to
send mixed signals about whether it will join in sponsoring the Baku-CYN.ptpt,
raising questions about Moscow's strategy for the U.S.-backed project.

Russian support for the ptpt from AZR's Caspian oil fields through Georgia to Turkey's
Mediterranean port of CYN would mark a major turning point in cooperation
between the two powers.

So far, there has been no official word from the Russian government about whether it
will approve participation of Russian oil companies in the
$2.75b
project, which is due to start construction in June.

As the weeks pass and the deadline approaches, Moscow's silence may soon be taken for acquiescence
that Russian companies are free to pursue their interests in a plan that it once fiercely opposed.

Talks with at least one Russian company appear to be in final stages. The president of AZR's state oil company
SOCAR, Natik Aliev, said that LUKoil is likely to sign an agreement for a share in the ptpt in March.

The Interfax news agency quoted Aliev as saying, "We are satisfied with the pace of negotiations with LUKoil
for the company to join the sponsorship group for the project to build the export ptpt."

On 25 February, the head of LUKoil operations in AZR, Fikrat Aliev, confirmed that
Russia's largest oil company plans to buy a share of 7.5-8 percent of the
project from SOCAR, the Turan news agency said. LUKoil's president, Vagit
Alekperov, spoke in similar terms in January.

But the latest statement from a Russian government official still leaves room for
uncertainty. Speaking recently in Moscow, Russia's Caspian envoy, Deputy Foreign
Minister Viktor Kalyuzhny, said that he "personally, as a Russian citizen, is
against the construction of this ptpt," according to Interfax.

On the one hand, the wording might mean that although the government has given its tacit
assent, Kalyuzhny continues to oppose the ptpt as a private matter. It might also mean that the
decision has yet to be made, and Kalyuzhny is arguing against it in the public interest.

Although the official position is unclear, Kalyuzhny seemed to leave no doubt where he
stands on the question of any non-Russian development in the region. Interfax
quoted him as saying, "The Caspian belongs to the Russian market."

Such sentiments were widespread when AZR announced its first offshore development
with foreign partners in 1994, but they have slowly faded with the recognition
that CIS nations have the right to pursue their own course.

Similarly, LUKoil … stress in the past that it would join the Baku-CYN.ptpt.prj only with
approval from the government, which owns 15.5 percent of its shares. But in recent weeks,
that cautionary note has also gradually vanished from reports on the talks.

Even so, Kalyuzhny's comment on Russian control of the Caspian may be a sign of the fallout
that President Vladimir Putin will face if he formally announces support for Baku-CYN. The
political resistance may account for the long lag in acknowledging that negotiations are well under way.

More curious is the resistance to the project on economic grounds. Since last year,
Kalyuzhny and other Russian officials have argued that Baku-CYN is not
"economically viable," instead of attacking it for political reasons.

The concerns include questions about whether the ptpt will attract enough oil to
fill its capacity of 1 million barrels per day. Some of the arguments are
self-fulfilling, in light of the fact that Russia can influence transport
decisions, both with its own oil companies and those of neighboring Kazakhstan.

In December, LUKoil said a new study by Britain's BP oil company had found that the
ptpt's profitability would be 24-24.5 percent, a margin that might be more than
enough to silence the official critics. BP is the operator of the project and
leader of the sponsorship group. Yet, the questions have not only come from officials.

Two weeks ago, the chief executive of Russia's second-biggest oil company, Yukos, sent his
own mixed message on the ptpt project. Mikhail Khodorkovskii told the Reuters
news agency: "Personally, I am for the Baku-CYN.ptpt. In recent times, the
Russian government has looked somewhat more favorably on this project." Yukos
has reportedly been considering a 12.5 percent stake in the project.

But
Khodorkovskii added, "I am not convinced of the economic soundness of the Baku-CYN ptpt."
In other words, unlike Kalyuzhny, Khodorkovskii favors the route personally and politically. But
he has the same doubts about the economics. This appears to be where logic breaks down.

Despite the repeated questioning about economic viability, there is a more basic question
that has yet to be addressed. Why would BP invest in a project if it was not
economically viable? For that matter, why would LUKoil, or Yukos, or any oil
company?

Khodorkovskii's public doubt about the economics could be nothing more than a bargaining tactic,
or it may be a way to please officials like Kalyuzhny. But either way, the arguments about politics
and economics will have to be settled in the next three months.

<>2002au18:Russia's northern port of Murmansk is the focus of the
latest plans to increase oil supplies to the United States. The interest in an Arctic export route
may also be a sign of continued opposition to the US-backed Baku-Tbilisi-CYN.ptpt, which offers access
to a warm-weather port.

Russia's top oil companies may combine forces in the Arctic port of Murmansk to
boost petroleum exports to the United States. Mikhail Khodorkovskii, CEO of
Russia's second-largest oil giant Yukos, said in Moscow that the firm is
considering a LUKoil plan for a new export terminal at Murmansk that could ship
1 mm bpd of crude
to the West.

LUKoil, Russia's largest oil firm, first floated the port plan in May during a
Moscow summit, where Presidents Vladimir Putin and George W. Bush signed a joint
declaration on creating an energy partnership. Since then, analysts have been
surprised at Russia's speed in promoting oil exports to the US market.

Shortly after Yukos' first oil delivery from the Black Sea port of NVR in early
July, the company announced it would make regular monthly shipments. Critics had
previously said that Russian routes to the United States would be too costly and
too long. Russian oil companies see Murmansk as a possible way out.

LUKoil has already approached the state ptpt company Transneft about building a line to
Murmansk on the Barents Sea and expanding facilities at the port, which is also home to
the Northern Fleet [of the Russian Federation]. LUKoil has invited other companies to join
in the project, and Khodorkovskii's statement is seen as a sign that rival Yukos may accept.

Khodorkovskii said on 14 August: "We have asked our colleagues from LUKoil to
send us a Murmansk route project, which we are currently studying. So far it
does not seem an unrealistic project." The Yukos endorsement could prove
important to the project because of the high price of ptpt construction.

A [ptpt] line of some 1,000 km from SBRn oil fields at Ukhta has been in planning
stages since at least 1998. Not all the Russian reaction to the plan has been
positive. On 15 August, Transneft's vice president, Sergei Grigoriev, was
comparing it to the US-backed Baku-Tbilisi-CYN.ptpt from the Caspian to the
Mediterranean Sea.

Grigoriev said that the new oil export route "risks being the new Baku-CYN: It demands a
lot of financing and is only oriented at the US market." Transneft is apparently concerned
that it would not control exports from the Murmansk terminal.

It is unclear whether alternate schemes are being considered. By 2010, LUKoil plans to produce
22 mm tpy of oil
from the Timan Pechora Basin bordering the Barents Sea, according to a May report. One advantage of
Murmansk is that its deep water could handle 300,000-ton tankers, reducing shipping costs.

*2002my:LUKoil Vice President Leonid Fedun said that transport costs of $28 per ton could compete
with oil from the PER.G. He noted that the outlet was considered the best for exports to the
United States in Soviet times. The port itself is ice-free with berthing depths of 11.5 meters and
potentially reaching 16 meters. Murmansk currently ships oil throughout the Arctic region, using
supplies delivered by rail.

The plan is roughly in line with several Russian trends. In addition to the US
energy partnership, Russia plans to raise its oil exports by more than 20% in
the next three years to
4.3mb/dy.
The plan confirms Russia's intention to act independently, despite statements of cooperation with OPEC.

Russia is rapidly expanding port capacity for oil exports with the recent start
of work on a terminal in the Gulf of Finland on the island of Vysotsk, after
opening a new port at nearby Primorsk last year. Transneft is also trying to
link Russia's D.ptpt to the Adriatic network so that it can export from Croatia's
deepwater port at Omisalj into the Mediterranean. Like a planned project through
Greece, the outlets could ease oil traffic through the Bosporus. Supporters of
the Murmansk route have cited the same benefit.

But despite the US partnership, all the plans assume that Russia will continue to shun the Baku-Tbilisi-CYN ptpt,
raising doubts about the limits of the policy. The project, which is due to be launched officially next
month, also aims to increase oil exports to the West and bypass the Bosporus. But Russia has opposed
he link through AZR and Georgia for the past eight years.

Moscow has reportedly barred LUKoil from joining the project [CYN ptpt], although the company has said
it may use the line to ship oil once it is built, since it owns a share of the oil fields that will
feed it. But the government's objections have apparently prompted plans for new northern routes like
Murmansk instead of a warm-water port like Turkey's CYN.

In May, Russia and Georgia announced a joint venture to build a link to Baku-Tbilisi-CYN from NVR, to
give it export access that would be unaffected by winter storms. Since then, there has been little sign
of progress on the plan. Grigoriev's comment suggests that Russia's distaste for the route is continuing,
along with moves to reach Western markets by other means. Source: RFE/RL

<>2002oc10:USA Cng passed resolution which was taken to give Bw2 the power
to use force in IRQ

<>2002no08:UNO passed resolution#1441 warning IRQ of "serious consequences"
if it did not comply w/ sanctions and arms inspections

<>2003ap:Washington Report on Middle East Affairs#22,3:35|
BAKU-CYN.ptpt Update--Oil and Water Don't Mix
By Andrew I. Killgore, publisher of this >WR.MEA.[TRK IST]
[SOURCE]

*2000: [Three years ago,] to expel doubts, then President Bill Clinton made a special
trip to Istanbul to countersign an earnest document that AZR and TRK build the
BKU (AZR) and CYN (Turkey) oil ptpt. Last year the two countries laid the
symbolic first section of pipe, near BKU, with Secretary of Energy Spencer
Abraham reading the laudatory words of President George W. Bush.

A snag has been hit, however [ecx], because the ptpt would threaten the Republic of
Georgia's highly prized mineral water in the Borjami Valley. Activists already
have demonstrated outside the London offices of the European Bank of
Reconstruction and Development [>ERD.bnk | W |
Wki],
which was to put up the financing for the project. This means that loans from
the Bank might not be available until the second half of this year.

Israel — and thus the United States — are sedulously pushing the ptpt to prove to Turkey that
its alliance with Israel pays off in Washington. [fnc=] British Petroleum (BP.crp.nrg ID),
which heads the 11-member consortium to build the 1,100 mile, $3 billion BKU-CYN, faces difficulties in
finalizing terms for external financing due to the project's high cost, technical challenges and security
and environmental concerns.

The consortium's smaller members, including AZR, which has a 25 percent stake in the ptpt, would be "forced
to find substantial sums of cash that it doesn't have," according to the Feb. 6 Financial Times. That
means the United States, or an international financial organization under American influence, will have to come
up with the money.

Originally all the oil companies operating in the Caspian region, including BP opposed BKU-CYN. British Prime
Minister Tony Blair — former Friend of Bill and current Friend of George — brought BP around to his
"special relationship" with the United States. But just where the daily million barrels of oil will come from
to make BKU-CYN viable remains a mystery.

[KZX] Given that AZR produces only "disappointingly small amounts," the only source for the extra oil is Kashagan,
Kazakhstan's very large offshore (in the CSP.S) oil find. But Kashagan's production will not come on line for
six to 10 years. Moreover,

<>2003oc,e:Lee Raymond, CEO of ExxonMobil corporation informed Russian Prime
Minister Mikhail Kasianov that ExxonMobil and YUKOS have been holding negotiations on possibility of a merger.
According to Wall Street Journal ExxonMobil was to acquire a forty-percent stake in YUKOS with a possible
controlling share upon Khodorkovsky’s retirement.[1]

<>2003oc30:NYT| Hints in Russia of Crisis Over Tycoon Case| By STEVEN LEE MYERS

MOSCOW,
Oct. 29 — Reports that President Vladimir V. Putin's powerful chief of staff
resigned in protest over the arrest of the country's richest businessman
heightened concern on Wednesday that the Kremlin had gone a step too far in
cracking down on him and his oil company, risking capital flight and political
instability.

Aleksandr
S. Voloshin, a quiet but influential figure known as Mr. Putin's "gray
cardinal," submitted his resignation on Saturday, the day that masked agents
arrested the tycoon, Mikhail B. Khodorkovsky aboard his private jet in SBR,
according to published reports and an analyst with ties to the Kremlin.

There were
conflicting reports on whether Mr. Putin had accepted Mr. Voloshin's
resignation. Mr. Putin did not address the question Wednesday, and a spokesman
at the Kremlin declined to confirm or deny his departure, deepening a sense of
turmoil around the Kremlin in the widening investigation of Mr. Khodorkovsky and
his company, Yukos Oil.

The reports
of Mr. Voloshin's resignation — and the possibility of a turnover in Mr. Putin's
inner circle — swirled through Moscow like a winter snow. It contributed,
analysts said, to a new drop in the country's stock markets, which wiped out the
modest rebound the day before after a steep drop on Monday.

It also
raised questions about whether a tactical move intended perhaps to strengthen
Mr. Putin and his circle ahead of December's parliamentary elections could prove
a strategic mistake that would weaken Russia as well as the president.

"This is
not pleasant news for the president," said Andrei A. Piontovsky, a political
analyst with the Center for Strategic Studies, who said he had learned of Mr.
Voloshin's resignations from officials inside the Kremlin. "It indicates the
depth of the political crisis he faces. I think the president was surprised and
tried to convince him to stay, but actually I know that Mr. Voloshin is
determined to leave."

Mr.
Voloshin, who has been the Kremlin's strongest advocate for advancing pro-market
policies, is the leader of one of the two factions widely believed to be
struggling for political influence under Mr. Putin.

On Mr.
Voloshin's side is a coterie of aides who favor greater freedom for the economy.
On the other are those advisers who, like Mr. Putin himself, served in the
K.G.B. or other security services and favor a stronger role for the state in
business and other matters.

That
faction, known collectively as the siloviki — or as Chekists, after the old
Soviet-era word for intelligence operatives — is widely believed to have
initiated or supported the prosecutorial assault on Yukos, though exactly why
remains unclear.

Mr.
Piontovsky, echoing commentaries in the Russian news media, said Mr. Putin had
come down on its side when he strongly defended Mr. Khodorkovsky's arrest on
Monday and rebuffed a request from business and industrial leaders to resolve
the allegations in a less confrontational way.

"Philosophically, he was always close to this group," Mr. Piontovsky said. "He's
Chekist. They're Chekist. All their philosophy — managed democracy, vertical
power — is what he believes."

The
investigation showed no signs of ebbing. The Prosecutor General's Office
announced Wednesday that it would investigate the abrupt appointment on Monday
of another senior Yukos executive, Vasily S. Shakhnovsky, to the upper house of
Parliament representing Evenkia, a sprawling but sparsely populated region in
SBR.

His seat
gives him immunity from prosecution. Appointments to such political positions
have become a well-worn path for prominent Russians facing criminal charges.

Earlier
this month prosecutors accused Mr. Shakhnovsky, the head of the subsidiary Yukos
Moscow, of filing falsely for tax breaks, but they did not arrest him. At the
time, Mr. Shakhnovsky called the accusation — similar to one of those against
Mr. Khodorkovsky — baffling.

After
regaining some ground from Monday's steep drop, the company's stock fell another
2.2 percent, closing at $12.10 a share, while one of the main market indexes,
the R.T.S., fell 3.7 percent.

If
confirmed, Mr. Voloshin's resignation "may send a signal to the foreign
investment community that this is not just about Khodorkovsky, and that other
changes are taking place behind the doors of the Kremlin," said Alexander Z.
Kazbegi, head of research at Renaissance Capital in Moscow.

Mr.
Khodorkovsky, 40, faces seven accusations of fraud, tax evasion and forgery. In
an unusual and lengthy statement, reprinted in Kommersant, the main business
newspaper, on Wednesday, the Prosecutor General's Office outlined a convoluted
web of what it described as shadowy financial dealings involving Mr.
Khodorkovsky and his associates dating back to 1994.

The
statement also accused him of committing embezzlement by transferring money to
another tycoon who has faced the scrutiny of investigators, Vladimir A.
Gusinsky, but it did not explain why the transfer was a crime. Mr. Gusinsky has
lived in self-imposed exile since fleeing fraud charges in 2000.

Anton V.
Drel, Mr. Khodorkovsky's lawyer, protested the statement's release and its tone
of presumption of guilt. In an interview, he dismissed the charges as
"absolutely groundless," saying that transactions cited as illegal had
previously been approved by courts and government auditors. On Tuesday he
appealed Mr. Khodorkovsky's detention, but he did not sound hopeful that he
would be released anytime soon.

A court on
Tuesday ordered Platon Lebedev, a major Yukos shareholder who was arrested in
July, to remain in prison until Dec. 30. Courts can order a suspect held up to
18 months while investigators make their case.

Mr. Khodorkovsky is in a cell with two other prisoners, said Mr. Drel, who visited
him again on Wednesday. Mr. Khodorkovsky, he said, had no complaints about his
treatment there, but he has not yet received permission to see his wife or
received books he had asked for.

Among other volumes, Mr. Drel said, he wanted a copy of the Constitution and the criminal
code.

---

<>2003oc31:NYT| MOSCOW FREEZES BILLIONS IN STOCK OF OIL PRODUCER

By STEVEN LEE MYERS and ERIN E. ARVEDLUND (NYT) 1547 words

Late Edition - Final , Section A , Page 1 , Column 1

ABSTRACT -
Russian prosecutors freeze stock worth billions of dollars in country's richest
company, Yukos Oil, raising stakes in their investigation of its imprisoned
chief executive Mikhail B Khodorkovsky; Kremlin announces that Pres Vladimir V
Putin has removed his chief of staff Aleksandr S Voloshin, who had already
resigned to protest Khodorkovsky's arrest; Putin replaces Khodorkovsky with his
deputy, Dmitri A Medvedev; these are most significant changes in Putin's inner
circle since he took office four years ago, demonstrating wide political
ramifications of Khodorkovsky's arrest; Yukos affair highlights central
political struggle in Russia between reform-minded officials favoring market
economy and others, many with security services background, who are determined
to retain strong dose of state control; Putin has tried to steer course between
two; he has reportedly criticized prosecutors who went after Khodorkovsky; he
meets with major investors to try to reassure them and calm political and
economic situation; freezing of Yukos shares sends country's already reeling
stock prices plunging still further

ABSTRACT - Former Enron executive David W Delainey pleads guilty to insider trading,
admitting that he sold millions of dollars in company shares at time he knew its
financial performance was being manipulated improperly; Delainey is
highest-ranking Enron official to admit participating in crimes, and his plea
signals new direction in government's criminal probe into Enron's collapse;
Delainey, Canadian citizen, will pay about $8 million in penalties--$3.7 million
in civil case and $4.3 million in criminal case; also faces maximum prison
sentence of 10 years and additional $1 million fine; agrees to cooperate in
continuing investigation

<>2003no05:NYT|How Russian Oil Tycoon Courted Friends in U.S. | By TIMOTHY L. O'BRIEN
In early 2001, as George W. Bush's administration moved into the White House, one of
Russia's wealthiest men, Mikhail B. Khodorkovsky, sought a meeting with the new
national security adviser, Condoleezza Rice. According to a former staff member,
National Security Council analysts were asked to perform a background check.

Mr. Khodorkovsky did not get the meeting — part of the tycoon's efforts to secure
approval from the American establishment — because of "allegations of past
business improprieties," the former staff member said, also noting that Mr.
Khodorkovsky spent heavily in Washington to court the Capitol's inner circle.

[Crl.grp] But Mr. Khodorkovsky's steady efforts to win access to other influential
Americans have paid off. Last July, he met with Energy Secretary Spencer Abraham
to discuss America's oil policy. Former President 2003se:George H. W. Bush
traveled to Russia and spoke at a dinner attended by Mr. Khodorkovsky.

That event prompted Moscow newspapers to speculate that the visit was part of an effort by
American companies to secure a merger with Yukos Oil, where Mr. Khodorkovsky was
chief executive until he quit on Monday in a swirl of fraud and embezzlement
charges. His replacement, a Russian-born American, was confirmed yesterday.

The Carlyle Group, an investment bank that retained the elder Mr. Bush as an adviser until a
few weeks ago, has a close business relationship with Mr. Khodorkovsky. Although
Mr. Bush was in Russia as a Carlyle representative, the bank said, his visit had
nothing to do with oil deals and he did not meet privately with Mr.
Khodorkovsky.

Last summer, too, Mr. Khodorkovsky traveled to a meeting of business leaders in Sun
Valley, Idaho, as a guest of a former senator, Bill Bradley, a New Jersey
Democrat. Mr. Bradley also advises the Open Russia Foundation, a Russian
philanthropy based in Britain that is bankrolled by Mr. Khodorkovsky.

Henry Kissinger, secretary of state in the Nixon administration, is on the
foundation's board, a position he said he accepted at the invitation of Lord
Rothschild, another board member. Mr. Kissinger said he had only met Mr.
Khodorkovsky twice, briefly and in a group.

"It is in no sense an endorsement of Mr. Khodorkovsky's business practices," Mr. Kissinger
said of his board seat, adding that Mr. Khodorkovsky exercised "no particular
influence" over the foundation's grants. He declined to comment further on Mr.
Khodorkovsky.

In his efforts to carve out contacts and make his name, Mr. Khodorkovsky has also
donated substantially to philanthropies in Russia and to American think tanks.

People close to him said he had three motives: improving his own reputation after
surviving Russia's scandal-plagued privatizations; refashioning operations and
perceptions of Yukos Oil in preparation for a merger with a Western company; and
the furtherance of economic and political changes in Russia.

"He wanted to have ties to the United States and he had a goal of exporting oil to the
United States," said Sarah Carey, a Washington lawyer who sits on Yukos's board
and is a close adviser to Mr. Khodorkovsky. "In order to do that you need to
develop constituencies here in Washington."

Philanthropy, she added, "is what smart guys do when they get rich."

Foreigners are not allowed to donate money to American politicians or political parties,
and most of Mr. Khodorkovsky's charitable giving has centered in Russia, where
Yukos reports philanthropic donations of more than $50 million annually across a
broad range of causes.

Through Yukos, however, Mr. Khodorkovsky has given handsome sums to American
organizations, including a $1 million donation to the Library of Congress and a
$500,000 pledge to the Carnegie Endowment for International Peace, a think tank
that is home to some of the most often quoted analysts of Russian affairs.

Carnegie notes that Yukos's contributions amount to less than 3 percent of its annual
budget. Anders Aslund, a Russia expert at the foundation who has criticized the
Russian government in its standoff with Mr. Khodorkovsky, said Yukos's backing
is disclosed on the Carnegie Web site. He added that while the donations are
significant, they do not affect his assessment of Mr. Khodorkovsky.

The American Enterprise Institute, another Washington think tank that has weighed in
on Mr. Khodorkovsky's behalf, declined to address financial dealings with Yukos,
citing the institute's policy not to comment on such matters.

Fiona Hill, a Russia analyst at the Brookings Institution, said many think tanks, needing
money for Russia studies programs, had courted Mr. Khodorkovsky zealously. She
said that Brookings, however, decided not to accept his donations.

"The think tanks were all joking about who wanted to take money to fund the Mikhail
Khodorkovsky chair of good corporate governance," Ms. Hill said. "There were
still questions about his business dealings and whether he really made the
transition from being a robber baron and now wore a white hat."

Others in Washington said that influence is not so easily purchased and that Mr.
Khodorkovsky had traction in the United States because of an authentic
commitment to corporate and political change in Russia.

"What
distinguishes Khodorkovsky is that he recognized that the rule of law was
necessary to legitimize his company," said Steve Biegun, who is a national
security specialist on the staff of Senator Bill Frist of Tennessee, the
Republican leader, and has met several times with Mr. Khodorkovsky.

"Russian
oligarchs have spread a lot of money around Washington over the last decade, but
we're not stupid here," he added, noting that Mr. Khodorkovsky's qualities
helped generate "a much deeper response than when other Russian businessmen have
been hounded."

Correction:
Nov. 7, 2003, Friday | A front-page article on Wednesday about efforts by Mikhail B. Khodorkovsky,
founder of the Russian oil company Yukos, to gain access to influential
Americans misstated the relationship between former Senator Bill Bradley of New
Jersey and the Open Russia Foundation, a Russian philanthropy based in Britain
and financed by Mr. Khodorkovsky. Although Mr. Khodorkovsky asked Mr. Bradley to
serve on the foundation's board, Mr. Bradley says he declined and is not
advising the foundation.

The state, itself, is acquiring greater authority over national energy
sectors -- as the owner of key assets and/or as a key actor in the
procurement, transporation, and disposition of energy flows. The expression
most widely employed to describe such a phenomenon is "statism" [ID], or, in some cases, "neomercantilism"
[ID]. Typically, Western analysits ascribe such behaviors to Chinese,
Venezuela, and Russian officials but rarely to Americans or other Western leaders [Klare.RISING=23]

But they should. "Virtually all major energy-importing countries, including the United
States, Japan, and the major Western European countries, have been engaging in activities that could easily
be characterized as "statist" or "neo-mercantilist" [24]

Why? "It is [...] a consequence of the fundamental
characteristics of energy in this demanding new era" [26]

NB! Klare says "new era", yet he is aware that England played that role from the early 20th century in the rise of BP

We might add that Klare is slow to explore the harmonies between "statism" and
transnational "corporatism" -- to coin a phrase, or adapt a Fascist term
[ID]
to our topic

[C.ASA UZB] A year ago this month [IE=In 2005my], security forces in Uzbekistan killed hundreds of
protesters in the town of Andijan. Human rights groups and journalists reported
that the crowd was overwhelmingly unarmed and had come out to protest corruption
and poor economic conditions. "The scale of this killing was so extensive, and
its nature was so indiscriminate and disproportionate, that it can best be
described as a massacre," Human Rights Watch said in a study of the events at
Andijan.

The regime of Islam Karimov sought to justify the carnage by saying that the
demonstration was organized by Islamic militants seeking to overthrow the
government (an argument the Uzbek government knows is music to the ears of the
Bw2 Administration). Last week the Karimov regime sought to prove its case by
staging the U.S. debut of a short video on the Andijan crackdown. The event was
sponsored by the Hudson Institute and the Central Asia Caucasus Institute (CACI[ID])
at Johns Hopkins University, and co-hosted by CACI director Professor S.
Frederick Starr. An account at EurasiaNet.org said that Starr "sought to
undermine the credibility of several independent news accounts . . . alleging
journalists deliberately falsified their stories. ‘I think they were lying . . .
of course they had an anti-government agenda,’" he said.

It was all in a day's work for Starr, who is perhaps the Karimov regime's most
outspoken advocate in Washington—a regime that once tortured a political
prisoner to death with methods that included the use of boiling water and then
arrested his elderly mother when she complained. He also speaks fondly of
several other despotic governments in central Asia, a region he views almost
exclusively through the prism of American geopolitical interests and with little
interest in issues like human rights and corruption.

Starr, an advisor on Soviet Affairs to Presidents Ronald Reagan and George H.W.
Bw1, is described by those who know him as charming, erudite, and brilliant.
His 1983 book, _Red and Hot: The Fate of Jazz in the Soviet Union, is widely
considered to be one of the most intellectually scintillating feats of Cold War
scholarship. Starr is a past director of Sidanko, a Russian energy corporation,
and Rector Pro Tem at the University of Central Asia.

Starr has led CACI since it was founded in 1996, and he has actively sought
friendly relationships with Central Asian governments and leaders. He even wrote
the preface to the 1998 English-language version of Karimov's page-turner,
Uzbekistan on the Threshold of the Twenty-First Century. Starr wrote that
Uzbekistan had "made impressive strides" since gaining independence in 1991,
including putting "in place the main elements of a more consultative and
responsive government," and went on to approvingly cite Karimov's assertion that
"social harmony and stability are the essential conditions for reform and not
merely its consequences." Translation: "Until the population stops complaining
about my leadership, reform is impossible and political repression required."

CACI has also worked closely with the Bw2 administration. Starr is especially
tight with vice president Dick Cheney's office and is friendly with ex-Deputy
Defense Secretary Paul Wolfowitz [>WwzP], now head of the World Bank [WoB]; Wolfowitz is also
the former dean of John Hopkins's School of Advanced International Studies,
where CACI is housed. The Ptg has long sought to justify its ties to
Central Asian [C.ASA] regimes and Starr has been happy to deliver the requisite
intellectual underpinnings. At the request of the Joint Chiefs of Staff he
helped author a 2001 study, Strategic Assessment of Central Asia, which was
produced by CACI and the Atlantic Council. "The U.S. government uses his
institute as a bridge to deepening relationships with governments in the
region," said a person familiar with CACI and who asked to speak off the record.

CACI works closely with the local Uzbek embassy and Starr sometimes appears on
Capitol Hill, where he offers testimony that invariably supports the regime. At
one congressional hearing in 2004 he said that Uzbekistan was making important
strides on democracy and attacked human rights groups, suggesting that they were
exaggerating problems under Karimov.

Starr also is frequently cited in the press, where his close ties to the
government go unnoted and he is identified merely as an independent academic
expert. In a 2004 story in the Washington Times, he decried Congress's
refusal to certify that Uzbekistan was making progress on human rights, which
had led to a partial aid cutoff. "This is a shortsighted, poorly informed and
self-defeating decision that contradicts the view of some of the best experts in
the stt.dpt itself and of independent experts as well," he told the newspaper.
"The decertification is a body blow to many known reformers in the Uzbek
government."

On May 16, 2005, just days after the Andijan massacre, Starr was already
peddling the Karimov regime's line in an interview on NPR. He generally blamed
problems in the country on Islamic militants, described the country as a
"linchpin of the region," and said a revolution there "could be a disaster." The
United States, said Starr, has "a very serious interest there, not jut a
security one but a large regional one because it borders all the countries in
the region."

Starr doesn't just do Uzbekistan. He served as an election observer to
Kazakhstan's 2004 parliamentary vote, a trip sponsored by a group called the
International Tax and Investment Center (ITIC). Starr and an "independent"
observer team that included ITIC's president, Daniel Witt, said that while much
of the Western media "judged the election a failure," it had concluded that the
balloting marked "a real and even notable step forward."

Starr and Witt were back to "monitor" the following year's presidential vote in
Kazakhstan and they again disagreed with the majority of observers who denounced
the election as badly flawed. "While there were shortcomings compared to
international standards, it was a genuine competition and represented an
important step forward, not only for Kazakhstan but the entire region," they
wrote. As with the 2004 ITIC report, the Kazakh embassy in Washington posted the
assessment on its web site.

So what exactly is the ITIC? According to the group's web site, it is a
non-profit organization "that is helping to lower barriers to tax, trade and
investment in transition economies by facilitating the exchange of information
and know-how between Western executives and government officials in these
countries." Witt emphasized in an email to me that ITIC receives no funding from
the Kazakh government. That's correct—but he does get cash from a host of
companies and organizations with interests in Kazakhstan, including the American
Chamber of Commerce in Kazakhstan, ChevronTexaco, China National Petroleum
Corporation, ExxonMobil, Halliburton, the Kazakhstan Petroleum Association,
Marathon Oil Corporation, and Occidental Petroleum.

I emailed back to ask Witt if such funding undermined ITIC's claim of
independence. "ITIC does NOT do election related work," he replied. "These two
election related missions were more my personal desire to further promote
economic reforms and show the positive correlation with political reforms. Thus,
there was NO influence on the above mission reports and related op-ed/articles
from any of our sponsors or board members."

Right. I'm sure Witt would deem as impartial an election observer team sent to
Cuba by a group that was funded by companies with billions invested on the
island. His assertion that ITIC does no election work seems equally bizarre,
especially as a statement by his team of observers was put out on ITIC
letterhead and both reports are on the group's web site.

Starr has also lent a helping hand to the regime in AZR. In October of
2002, Aliyev.Ilham – who has since succeeded his father as president but was
then First Vice-President of the state oil company, a member of parliament,
Vice-Chairman of the ruling New Azerbaijan Party, and head of the national
Olympic Committee—visited Washington for meetings with Bw2 administration
officials and with "prominent policy thinkers," according to a statement from
the Azeri government, which listed Starr in the latter category.

During that visit, Aliyev also spoke at Johns Hopkins, an event sponsored by
Starr's CACI and Harvard University's Caspian Studies Program, the latter which
has converted itself into the Azeri government's unofficial press agency.
The Caspian Studies Program was launched in 1999 with a $1 million grant from the
United States-Azerbaijan Chamber of Commerce—whose past and present advisors and
directors include Dick Cheney, Henry Kissinger, James Baker III, and Brent
Scowcroft—and a consortium of companies led by ExxonMobil and Chevron. Its
inaugural program was a panel discussion featuring Ilham Aliyev.

Unlike Harvard, Starr apparently doesn't charge for his services. He told me
that CACI receives no funding from Central Asian governments or oil companies
other than $25,000 annually from Chevron during the Institute's first few years
of existence, which Starr said was cut off because the company disagreed with
certain positions taken by CACI. Given Starr's record, that's true ingratitude.

<>2006de21:ASHGABAT (Reuters report by Marat Gurt) - Turkmenistan
President-for-life Saparmurat Niyazov died suddenly on Thursday after 21 years
of iron rule in which he crushed all dissent, raising fears of instability in
the isolated but energy-rich C.ASAn state.

He was 66.

Niyazov, who fostered a bizarre personality cult as absolute ruler of a country
with huge natural gas rzv~, died overnight of cardiac arrest, state
television said.

His funeral was set for December 24 and the government fixed December 26 for the
desert nation's highest representative body to meet to decide on the succession
and name a date for elections.

Turkmenistan has never held an election judged fair by Western monitors. Until
the new polls, which have to take place within two months, Deputy Prime Minister
Kurbanguly Berdymukhamedov, 49, will be acting head of state.

Niyazov, who held all top posts, left no designated heir and his death raised
concerns about the transfer of power in the ex-Soviet nation of 5 million, where
foreign oil and gas companies are keen to invest.

Turkmenistan is a vital link in the supply chain between former Soviet gas
fields and European Union consumers since it meets the demands of the huge
Ukrainian market, freeing up Russian gas for Europe.

Once a Soviet apparatchik, Niyazov took the title of "Turkmenbashi (Head of the
Turkmen) the Great" and had thousands of portraits and statues of him set up
throughout the country.

They include a statue in gold leaf that rotates to face the sun in the capital
Ashgabat. He renamed the month of January after himself and his name was also
given to a sea port and even a meteorite.

Niyazov's health had long been the subject of speculation among
Turkmenistan-watchers and foreign investors. After heart surgery in 1997, he
quit smoking and ordered all his ministers to follow suit. He had publicly
admitted to heart problems.

Flags flew at half-mast on Thursday from public buildings in Ashgabat, a Soviet
city grandly reconstructed to showcase Niyazov's power.

Workers removed all New Year decorations from the streets and television ran
still images of a national flag in a black-bordered frame as an orchestra played
solemn tunes.

The public mood appeared calm but, given Niyazov's long, unchallenged rule, some
expressed concerns for the future.

"I'm worried that a power struggle will start now. I just hope there will be no
civil war," Rumina, a school teacher who declined to give her last name, told
Reuters at a local market.

FIGHT FOR POWER?

Under the constitution, Parliament head Ovezgeldy Atayev should have
automatically become acting head of state. But, in a sign of political tensions,
justice officials immediately opened a criminal probe into his activities,
blocking his appointment.

"I expect there will be a massive fight for power now in Turkmenistan and it's
likely to take place between pro-U.S. and pro-Russian forces," said a Russian
gas industry source, who declined to be named. "Gas will become the main coin of
exchange and the key asset to get hold of."

Although others doubted any successor would want to put vital gas contracts at
risk, one EU diplomat in Moscow said: "If there is a change in gas policy, that
would have an impact on Ukraine and then on the European supplies. It's a domino
game."

Niyazov brooked no dissent and was criticized by human rights groups for
flouting basic freedoms and allowing torture.

International rights campaigners urged Turkmenistan to release hundreds of
jailed political prisoners.

"We can only hope that his successors will ... honor the fundamental rights and
freedoms the people have been cynically denied," said the International Helsinki
Federation for Human Rights.

In a statement, the U.S. embassy in Ashgabat said Washington hoped "for a
peaceful, smooth, constitutional succession". The Kremlin urged Ashgabat to
continue good ties with Russia.

Berdymukhamedov, the new acting president, is said by the opposition to be
related to Niyazov. He was earlier named to head a commission handling the
funeral.

But the country's constitution appears to rule out an acting president standing
as candidate for election as head of state.

Exiled Turkmen opposition activists said they intended to immediately try to
return home.

"Our first task is to return to Turkmenistan within hours ... In Turkmenistan
there is no opposition, they all sit in prisons or under home arrest. But
outside the country opposition exists and it is coming back," one activist,
Parakhad Yklymov, told Reuters by telephone from Sweden.

2003+:IRQ emigres who rt-IRQ w/USA mlt did fairly well in 2005 IRQ.PRL elx, but
mainly on basis of "appeals to sectarian and ethnic identity" [Muttitt.FUEL:213 argues
that this sectarian and ethnic divisiveness was provoked by USA policy and was
not a part of the IRQ indiginous plt.clt. It served as justification for USA
policy of imposition ((CF=1999mr25:Kosovo))]

IRQ plt.clt increasingly pushed by USA into vs-USA stance, but ironically
nurtured w/in tUt created by invading mlt (IRQ.PRL) and led in part by fxn~
friendly to USA but increasingly unable to act on that friendly disposition, a
result of USA duplicity and increasingly bold expressions of native INX~ embodied in brave,
dmkically expressed IRQ dms pltics

mltarism (MIC + grab for nrg.p) in guise of dmkization spawned its own
natural nemisis = the biting of the hand that feeds it

Muttitt.FUEL:197-8 summary = IC.IRQ "firmed up and elaborated the benchmarks of [USA prx] Bw2's New Way Forward and
established a structure through which people from donor countries and international
institutions would [197/8] work closely with Iraqis to deliver them on tight deadlines. In
other words, the Iraqi government would now be micromanaged"

Oil lwx essential component of claims the "surge" had been a success, so USA
"sent a message" to Maliki =

Oil lwx passes or Maliki in trouble| This was USA action with respect to the
IRQi dmk energies it had "liberated"

2007je15:BGD rec'd 18000 "surge" troops, all deployed in and around the capital city,
completing the 5-mo plan "Operaton Imposing the Law", IE= preparation to seize control
and cut off BGD frm ntn [Muttitt.FUEL:212 sd this = reminder of "shock and awe", IE=mtl.trr]

2007jy06: dmk.NOW website described Oil.unx opposition to
the Oil.lwx [E-TXT]

IRQies increasingly convinced that "the occupiers had a twin strategy of
dividing the country and taking control of its oil. The
anti-decentralization an anti-privatization arguments were thus lined up
together in opposition to the oil law" [Muttitt.FUEL:207]

WikiLeaks pbd USA.Emb.irx cables rpting that IRQ MP~ wanted to support USA
Oil.lwx but now found it pltally impossible under new conditions of IRQ dmk

Muttitt.FUEL:215 = "in 2005 the parliament's configuration had been largely
tripartite -- Shi'a, Sunni, and Kurdish blocs -- now it was coalescing into two
groupings that cut across those lines. On one side were what Iraqi blogger Raed
Jarrar called the 'nationalists,' who held traditional Iraqi views of national
unity and centralized power and were most opposed to the ongoing ocupation and
to U.S. political agendas, including privatization. Against them were ranged the
pro-occupation 'separatists,' who favored strong federalism with powerful
regional governments defined by their ethno-sectarian identities and foreign
investment in the form advocated by the United States"

<>2007ja:GOOGLE Larry Korb
and Peter Singer, and also search warnewsradio.org
for info on private contractors in USA mlt, very active in IRQ & AFG, including
foreign cmp~. As many as 60 thousand US soldiers are not USA citizens.

<>2007mr12:LND| Financial Times|
|>Hoyos,Corola|>7ssN| "The New Seven Sisters: Oil and Gas Giants Dwarf Western Rivals"
[E-TXT]|
((The old "Seven Sisters" appeared to be eclipsed by emerging, largely state-owned
companies. Financial Times consulted with industry executives to produce this list of new seven sisters =

In the 1990s the 7ss shrank to 4ss [=7ss.lgc (BP.crp.nrg ID
|
Chv.crp.nrg [ID] (having absorbed Gulf and Socal) | ExxM.crp.nrg
[ID] (having absorbed
Mobil) | Shell.crp.nrg)]. Now the 4ss produced ca. 10% of
global oil and gas and held just over 3% of rzv~. Because the 4ss are so
highly integrated [u&d], they still earned much higher profits than the new
7ssN abv))

<>2007je05:Reuters dispatch|>Roberts,Kristin| "U.S. needs
Kyrgyz base to fight Taliban: Gates"| BISHKEK (Reuters) - U.S. Defense Secretary Robert Gates said on Tuesday
Washington's agreement to use a military air base in Kyrgyzstan was necessary to support the war in Afghanistan.

Last month Kyrgyz lawmakers urged the government to evict U.S. troops from the base which is an important
hard currency earner for the impoverished C.ASAn state.

"I think what's important for the people of Kyrgyzstan to understand is that our use of Manas (Air Force Base) is in
support of a larger war on terrorism in which Kyrgyzstan is an ally of virtually every other nation on earth," Gates said.

"We are all working to try and prevent a resurgence of the Taliban in Afghanistan and our use of Manas is one way
in which Kyrgyzstan can play a very important and constructive role in cooperation with many other nations, just
not the United States," he told reporters after meeting Kyrgyzstan's minister of defense.

The United States has about 1,200 U.S. troops in Kyrgyzstan. Kyrgyz officials have demanded Washington pay more for the use of the base.

Gates defended the 2001 military agreement that allows the United States to use the base in the former Soviet nation.

"The arrangements that we have at Manas are similar to those that other nations have who have military forces
here in Kyrgyzstan," Gates said, in a veiled reference to Russia.

"I think that seems appropriate."

The U.S. military presence in C.ASA suffered a blow in 2005 when
Uzbekistan expelled U.S. troops from a base following Western
condemnation of the use of force to quash a revolt in the town of Andizhan.

<>2007au15:Reuters
dispatch|>Doyle,Alister [ecx ggr.plt] Environment Correspondent|
"Russia's seabed flag heralds global ocean carve-up"| OSLO (Reuters) - A Russian
flag on the seabed beneath the ice of the North Pole is among the few signs
that states are waking up to a 2009 deadline for what may be the last big
carve-up of maritime territory in history.

By some estimates, about 7 million sq km (2.7 million sq miles) -- the
size of Australia -- could be divided up around the world with so far
unknown riches ranging from oil and gas to seabed marine organisms at stake.

Only eight claims have been made although about 50 coastal states are
bound by a May 13, 2009, deadline for submissions under a U.N. drive
to set the now vague outer limits of each country's sea floor rights
under a 1982 convention.

"We are clearly behind schedule," said Peter Croker, a senior Irish
official who is the outgoing chair of the U.N. Commission on the Limits
of the Continental Shelf, which examines coastal states' submissions.

"There's quite a lot at stake. But there has been a bit of inertia," he said.

Russia, Australia, France and Brazil are among the few to have made
claims. Most spectacularly, Moscow announced this month that explorers
had planted a rust-free Russian tricolor beneath the North Pole in
waters 4,261 meters (13,980) deep.

Under the 1982 Law of the Sea Convention, coastal states own the seabed
beyond existing 200 nautical mile zones if it is part of a continental
shelf of shallower waters.

Some shelves stretch hundreds of miles before reaching the deep ocean
floor, which is owned by no state. The rules aim to fix clear geological
limits for shelves' outer limits but are likely to lead to a tangle of overlapping claims.

LAST SHIFT

"This will probably be the last big shift in ownership of territory
in the history of the earth," said Lars Kullerud, who advises developing
states on submissions at the GRID-Arendal foundation, run by the U.N.
Environment Programme and Norway.

"Many countries don't realize how serious it is."

Yannick Beaudoin, who also works at GRID-Arendal, said: "2009 is a
final and binding deadline. This allows you to secure sovereignty
without having to fight for it."

The biggest controversies look likely to occur in regions where
countries ring water, such as the South China Sea or the Arctic Ocean.

Isolated specks on the map, such as Easter Island or Ascension Island, could
end up owning vast tracts of seabed. Off Africa, Madagascar may have a
strong claim to a shelf stretching far south towards Antarctica.

Sorting out rights to minerals, geothermal energy or marine organisms
far from the coast is becoming ever less academic as technology a
dvances -- modern oil rigs can drill in water 10,000 feet deep.

Moscow's North Pole stunt, with explorers planting a flag with a
mechanical arm from a submersible, was denounced by some other Arctic
countries as a crude land grab.

Russia says a ridge under the Arctic Ocean makes the pole Russian, even
though the coast of Siberia is 2,000 km (1,200 miles) away. Greenland,
administered by Denmark which also says the pole is Danish, and Canada
are at the other end of the same ridge.

"Other coastal states have as good a case as the Russians," said
Lindsay Parson, an expert on continental shelf law at the University
of Southampton in England.

OPEN QUESTION

Croker said it was an "open question" whether any state could back up
a case for claiming the North Pole.

The polar dispute is about more than bragging rights to ownership of
what many reckon is Santa Claus's home -- by some official U.S. estimates, the Arctic may hold a quarter of the world's undiscovered oil and gas
[u&d#1].

"Companies can now exploit oil and gas in deeper and deeper waters," Parson
said. "The more you know about resources the harder it is to be friendly i
n sharing the seabed."

No firm is able to drill anywhere near the North Pole, but global warming
may make the region more accessible.

Drilling group Transocean says its Discoverer Deep Seas holds the world
depth record for oil and gas drilling, set in 2003 at 10,011 feet of
water in the Gulf of Mexico.

"We are building four new enhanced Enterprise-class drill ships
(in South Korea) that will be able to work in water depths of 12,000 feet
and drill wells 40,000 feet deep," said Guy Cantwell, spokesman for Transocean.

Any state missing the 2009 deadline risks losing U.N. recognition of the
claim. Countries that have not yet ratified the Law of the Sea Convention,
including the United States, are not bound by the 2009 deadline.

The U.N. Commission cannot decide on overlapping claims, merely refer
them back to governments to sort out -- a process likely to take
years, or decades. Any extended rights will apply only to the seabed, not to fish stocks.

Experts say an extension of fishing limits to 200 nautical miles
in the 1970s, the last big change of the ocean map, caused barely
any conflicts. Britain and Iceland fought "cod wars", but with few
casualties in clashes between frigates and trawlers.

Offshore disputes between neighbors such as Iran and Iraq are generally
about resources closer to land.

Croker said the deadline might even promote cooperation.

"It could be a trigger for states to sit down and try to sort out
these issues," he said, noting that Spain, France, Ireland and Britain
had made a joint submission covering the Bay of Biscay. "It can work in a positive way."

Norway, one of the few countries to have made a submission, said
it cooperated closely with neighbors such as Russia and
Iceland. "We have shared our data at expert levels," said Rolf Einar Fife
of the Norwegian Foreign Ministry.

"almost
1/3" of wrl proven rzv~ and exports more gzz than anywhere else, and is

2nd
largest nrg.p
exporter after SaA| RUS "is the main conduit for oil and gas
shipped from the former Soviet republics of C.ASA"| BUT= rtl claims that RUS may b
e unable to meet customere’s demands by about 2010

Some
"Western leaders" [later in rtl more specific ID but now evasive abt "leaders" =
"Skeptics in Washington and some European capitals"] worry re. "growing
dependence" granting "the Kremlin a powerful geopolitical weapon"| And now 2
agreements worth $2.2b w/SRB will make "the poor Balkan nation" an important
distribution hub for RUS gzz| RUS has been "rushing" to build or buy EUG ptpt,
storage facilities, ports and nrg cmp~| Skeptics say RUS uses nrg as "coercive
tool of diplomacy". Then !! = "The United States has led an effort to limit
[Russia’s] inroads -- in part by planning new energy ptpt~ that would bypass
Russian territory"| These alternative ptpt~ are not working out| !!= the EU’s
"quest for energy independence has fizzled"| Chris Weafer, chief strategist at
UralSib, a RUS investment bnk, sd, "You can now say that Russia has either won
the war or is very close to winning the war" [reference, apparently, to
competitive race (war) to create delivery routes to EUR]. EU sought non-RUS gezz
supply routes "but failed to achieve anything. [...] The Kremlin moved much more
quickly and much more decisively."

Bibliography
Links to UO KNIGHT LIBRARY were severed
when the new electric catalog suddenly came into usage
Here is an explanation of what to do about this unfortunate development
Meanwhile, SAC editor is working to restore the most important linkage to KNIGHT
Many entries here are organized according to a KIMBALL FILES data template
[ID]

((
CF= Greene.STRATEGIES|
[Following pgf frm Kaufman.OIL:3-15] As early as 1946 P. H. Frankel argued [l&r=] the economic logic
of large integrated firms working closely together to control the various processes of the oil
industry. According to Frankel, the high costs and risks of investment, combined
with the lack of a self-adjusting market mechanism, resulted in centralized
control of planning and the ultimate domination of the industry by a small group
of integrated firms. Other economists have since expressed similar views and oil
company executives have stressed the efficiencies allegedly inherent in
integrated operations, a point Frankel also conceded. [P. H. Frankel, Essentials
of Petroleum: A Key to Oil Economics, 2nd ed. (London, 1969), especially pp. 1-9 and 175-83.
For a somewhat different analysis G/Hartshorn.POLITICS1 and G/1961au:JPE || In direct
contradiction to Frankel, M. A. Adelman of
the Massachusetts Institute of Technology has commented, "The nrg.pc oil
industry, contrary to common belief, is inherently self-adjusting. Under
competition, the level of output, and its divisions among various sources of
supply, are set by the price acting upon the cost of bringing up more output.
This incremental cost, for every individual unit and for the system as a whole,
increases rather than decreases with greater output. It therefore serves as the
governor of the producing mechanism in general and in any particular place."
[Adelman.WORLD:13]. See also Edith T. Penrose, The Large International Firm in Developing
Countries: The International Petroleum Industry (London, 1968), pp. 46-49 and 165-71
))

The "invisible hand" is
not gentle. It slaps and cuffs sellers to stay in line and keep moving where they
do not want to go, "to promote an end which was no part of his intention" (Adam Smith)
[ID]. Sometimes it hits hard enough to kill.
Sellers think they are entitled to a "fair'' price. Entitled or not, they can
get it only by some kind of arrangement to evade or reduce competition. || The
narrative theme of chapters 3 through 8 is how the owners of most of the
world's oil resources have restrained production from an abundant oil supply to raise the
price. To restrain output, they must first restrain one another. They feel the
threat of a war of all against all. [...] What I once called "the clumsy cartel" tried to fine
tune with coarse instruments. Hence the "energy crises" we examine. [Adelman.GENIE:xxiii]
The political benefits of a lower oil price might be much greater than the economic. The flow of oil wealth
makes some producing countries worth invading and gives others the means to invade or to threaten a shutdown
around the PER.G. The smaller the oil revenues are, the less is the chance of aggression and of the
producing governments' buying nuclear and other weapons. They are undemocratic, and there is no change of
regime except by violence or conspiracy. Many of their inhabitants are in a pious rage. Those who disagree
with them serve the Great Satan and deserve only death and the Fire. The less hard currency there is in such
hands, the better off is the rest of the world. [Adelman.GENIE:328]

))

}s{}t{}8{}
<>Ahrari,Mohammed E|
a{}n{}o{
}r{
*1980:NYC,Arno Press|_The_Dynamics of Oil Diplomacy: Conflict and Consensus| ((UO| 8x11:xrp|OPEC| trx & specific
EGs of "alliances" among large tntn crp~ and among ntn.stt~))
}s{}t{}8{}
<>Al Arabiya|
On-line journal devoted to news of the Arabic world| ((SaA))
<>Alekperov,Vagit|_Oil of Russia: Past, Present and Future|>Alekperov.OIL| *2011:M.MN,East View ((UO|
A detailed hst of RUS oil industry by one of its leading figures – LUKOIL prx| ch#1= “The Russian Empire’s ‘Black Gold,”
includes historical sketch of the formation and development of Russia’s oil industry from ancient times until the end of 1917,
an overview of major Russian oil companies, profiles of key historical and contemporary figures, a selected bbl, a full
listing of Vagit Alekperov’s previous works, and ndx))
<>American Economic Review|>AER|

<>Anderson,Irvine H, Jr|*1975:NJ.PUP|_The_Standard-Vacuum Oil Company and United States East Asian Policy,
1933-1941| ((UO| Kaufman.OIL=195-200 sd Anderson emphasizes [that] oil and the federal government often
followed the same course for different reasons. [CHN=] In the early 1930s the
Standard-Vacuum Oil Company (StanVac) and Royal Dutch Shell were mostly
concerned with protecting their marketing interests in Japan, Manchuria, and
China, while American diplomats were more worried by Japanese violations of the
Open Door treaty system. Similarly, toward the end of the decade, while StanVac
and Shell were interested primarily in protecting their sources of supply and
investment in the East Indies, policy makers were concerned mostly with matters
of security and defense. Because institutional interests intersected, teamwork
developed between the stt.dpt and the oil companies, as for example,
when both in 1940 worked out a temporizing agreement to maintain limited oil
supplies to Japan. But as relations between the United States and Japan
deteriorated increasingly after 1940, control of oil policy centralized more
and more in Washington. In the summer of 1941 the Roosevelt administration
finally made the fateful decision to cut off all oil to Japan, thereby
endangering Stanvac's (and Shell's) investments in the Indies. By this time
Stanvac had become an agent rather than a participant in policy formulation. As
Anderson concludes:

During August 1941 administration made policy. ... Since Stanvac was actually
responding to requests of the Assistant Secretary of State and since [Secretary
of State Cordell] Hull subsequently ratified the de facto embargo, it
would be difficult to characterize Stanvac as anything other than an
implementor in this phase also. Certainly the company suggested no new
departures.17

<>Bacevich,Andrew J| "The real World War IV"| *2005wi:The Wilson Quarterly#29(1):36ff|
((
E-TXT| irx| America's political and military efforts in the Middle East[AfroAsia] go by many names:
"War on terror", "Clash of civilizations", "Democratization", etc. But Bacevich argues
that all of these undertakings grow from a fateful decision made as WW2 wound down = The
American way of life requires unlimited access to foreign oil))

<>Beeby-Thompson,Arthur|
n{}o{
}r{
*1908:LND|_The oil fields of Russia and the Russian petroleum industry : a
practical handbook on the exploration, exploitation, and management of Russian
oil properties, including notes on the origin of petroleum in Russia, a
description of the theory and practice of liquid fuel| ((SMT| UO has other
more gnr B-T pbc~ on nrg.p))
}s{
}t{NO Wki
}8{}

War is something British Petroleum knows well. The company was invented for wars. The enterprise was the very
basis for wars. It actively participated in wars, determined the size and shape of wars, and was, in fact, a war
company from the moment of its inception and through most of its war-torn history. Oil invented the political
Middle East as we know it, creating nations that never existed before, for the sole purpose of becoming fuel
states to supply this company. Oil was the ignition device for World War I, which saw the death and
dismemberment of millions on all sides. Oil lubricated the Nazi war machine that savaged humanity. Oil
has intoxicated and addicted the world as we know it today. The history of Mideast oil and the reddened
black puddles it has created in so many countries is in fact the parallel history of one company that hinged
much of its success upon a single secret agreement. That story spans a century: British Petroleum and
the Redline Agreement.

))
*2008:WDC,Dialog Press|>Black.Plan|_The_Plan: How to Rescue Society
the Day the Oil Stops -- Or the Day Before| ((E-TXT
excerpts| SMT (Portland CC bbt, but no nrg.e link) ))
}s{Wki
}t{}8{}

More recently, John M. Blair [...] has
attacked the oil industry from a somewhat different perspective. Without denying
Engler's assertions about oil's power over the public weal, Blair's emphasis
has been on the industry's internal structure. A former economist for the
Federal Trade Commission and the chief economist for the [SA&M]
Senate Subcommittee on Antitrust and Monopoly, Blair has spent his career
attacking the aggregation and concentration of economic and political
power within the oil industry. Operating before WW2 on the basis of
formal monopolistic arrangements [EG], including local and national cxx~, and after
the war through a form of noncollusive oligopolistic interdependence, seven
major oil companies [ID], Blair argues, have been ablefor the most part to
control the flow of foreign and domestic oil, excluding outsiders. Thus, they
have been gaining preferential tax treatment, limiting supply to demand,
arbitrarily determining profit ratios, and, in general, making large profits at
the public expense and with little concern for the national welfare. "Through
the planned and systematic restriction of output at home and abroad," Blair
concludes about the postwar period, "the oil companies directed their
energies... toward maintaining domestic and world prices at or above the then
unprecedented levels. And until the mid-1960s, these efforts met with a
remarkable degree of success."6

[More Kaufman.OIL=] The Control of Oil has been rightfully
acclaimed by many reviewers as the most incisive and damaging account yet
published [as of 1978] on the oil industry. It is based on the wealth of information and
expertise that Blair acquired over his career of almost forty years as an
economist on vs-fdu and oil matters, including, in the 1950s, the preparation
for the Federal Trade Commission of a now-famous report on the International
Petroleum Cartel [ID]. The Control of Oil combines statistical analysis,
elaborate documentation, and well-reasoned argument to expose the dimensions of
power accrued within one industry controlling the arteries of national
existence. Written from the perspective of the present energy crisis [1978], it also
remains a cogent argument for the breakup of the oil industry [u&d=] into a system of
independent, nonintegrated companies and for the development of new energy
sources, most notably the oil shale deposits of the Rocky Mountain states.

[And yet more Kaufman.OIL=] ...accepting another author's analysis of the oil
industry as "the greatest aggregation of effective economic and political
industrial power which the world and nations have ever known," [Blair] concludes that
"the historical role of the federal government has been not to restrain the
industry but to make more effective its exploitation of the public interest."

[And still more Kaufman.OIL-= Other writers have stressed this point even more strongly.
Indeed, John Blair, whose book The Control of Oil has been so widely hailed
as the best account of domestic and international operations of the oil industry,
dismisses almost entirely considerations of national INX~ in determining federal policy toward the
multinational oil corporations. Illustrative of this fact is Blair's analysis of
the import-quota legislation of the 1950s, the justification for which was
national security but the results of which were sharp limitations on imports of
cheap foreign oil, the maintenance of high domestic prices, and the hastened
depletion of domestic rzv~. Rejecting the national-security concern as
unlikely by itself to have brought about "such a far reaching change in national
policy," Blair emphasizes instead a journalistic account of an alleged $1
million deal made by Treasury Secretary Robert Anderson just before he took
office, the payment of almost half of which depended on the price of oil after
Anderson assumed his post.14

[And finally 2 pgf~ frm Kaufman.OIL = ] Indeed, considering the rapid
growth of oil demand during and after the 1950s and the fact that the refining
and distribution of oil has been dominated since the 1880s by a small group of
larger integrated firms, it is even possible to argue that the United States had
no choice but to work through the major firms. This argument I reject for
reasons outlined by John Blair who makes a convincing case for breaking up the
large integrated corporations.25 Yet, Truman and Eisenhower believed
it was necessary to rely on the major firms [,] and understandably so [,] considering
that these firms were the only ones in the
1950s with established facilities for refining and distributing Mideast oil.

Therefore, although I remain fully cognizant of the
oil-power thesis, with its emphasis on the control of government by oil, I reject its implication that foreign oil
policy was largely a response to the private interests of oil. This seriously
underestimates the corrosive impact of the Cold War and is, consequently,
historically inaccurate.

Kaufman.OIL Intro ftn#25 = Blair.CONTROL argues essentially against the
natural-monopoly theory of oil, maintaining that the "competitive approach
offers four fundamental theoretical advantages: prices are set at an
economically desirable level, the level needed to bring forth the supply
required to meet the existing level of demand; there is a constant downward
pressure on costs, as less efficient producers must either modernize to meet
the competition of their lower-cost rivals or go out of business; a constant
stimulus is provided for [u&d#1] the discovery and development of new
products and processes; and resources automatically move out of industries
where they have become redundant and into those where they are needed." At
the same time he dismisses such arguments against divestiture as the alleged
competitive nature of the oil industry, its modest long-term profit
showings, the practical problems of divestiture (such as the cost and
mechanics of assets distribution, the drain on capital markets, and the
effect on investors), and, most importantly, the supposed damaging effects
on industrial efficiency. All these points, he shows, are subject to serious
challenge. Finally, Blair concludes, the restoration (or, at least, the
increase) of competition in the oil industry would minimize "the harm that
can be done by any small group of individuals, thereby making influence and
corruption more cumbersome, expensive, and of most importance, ineffective."
Blair.CONTROL:371-400

Here is Bert Ruiz's review of Blair.CONTROL =

...a brilliant look at how the
price of crude oil was determined by giant petroleum companies (the seven sisters) and a dozen members of the
Organization of Petroleum Exporting Countries (OPEC). Blair traces the history of these controls and explains
how they recklessly triggered the 1970's global energy crisis || ...Blair spent thirty-two years in the
federal government. He started in 1938 as an author of monographs for pre-World War II investigations. Early
on, he made his name focusing on the sizable concentrations of economic power in the oil industry by the
Rockefeller family and family foundation. Afterwards he spent nearly a decade with the Federal Trade
Commission as an Assistant Chief Economist and finally Blair spent fourteen years as Chief Economist of
the Senate Subcommittee on Anti-trust and Monopoly. What makes this book truly special is the author's
enormous access to critical government information || Blair [Blair.CONTROL] describes the oil industry's principal tax
preferences, which worked to the advantage of the major companies and against smaller nonintegrated
companies that could have favorably altered the availability and price of oil to consumers. The author
also goes into great detail to reveal how the "Arab Embargo" that set the stage for the massive oil
price explosion of October 1973 - January 1974 had little impact on supply and that in reality there
was no crude oil shortfall. Ultimately, Blair emphasizes the need for developing alternate energy sources
in the future || This book had its genesis in a special 1973 Ford Foundation Energy Policy Project[EG]. The
final result is a groundbreaking examination of the dramatic profits of oil companies.

Here is a very solid review by John P. Jones, III =

...the seminal account of the methods utilized to explore for, produce, and market
one of the world's most important physical resources, petroleum. His account dates from the
mid-70's, shortly after the loosely termed "Arab Oil embargo"
[ID]At the time he was a professor
at the University of South Florida, but he drew on his experience, and the data obtained
through 32 years of work in the Federal government. In many ways, he was
uniquely placed to write such a book. Overall,
[Blair.CONTROL] is written in textbook-style, with flat prose, and lots of
charts and graphs. The account though is sprinkled with acerbic passages that underscore
his central thesis that a small group of individuals, working for the major oil
companies ("The Seven Sisters"), devote their efforts to determining, as they see it, an
orderly manner in which this resource is sold to the general public, on highly lucrative and
beneficial terms to the "guys in the backroom." Yes, Virginia, there really is a "free-market," but
you see it exists in the minds of these guys, and their PR minions, as the most effective
mechanism for diverting a glaring light from their decisions || Blair starts with the
"energy
crisis" of 1973, and proves rather convincingly that overall there was no restriction in
supply, yet nonetheless, the price quadrupled, and even after the purported boycott was
ended, the price remained at these elevated levels. The author devotes two chapters to
the evolution of the control mechanism, both in terms of supply and marketing, and the
concerted effort to exclude the "outsiders," those not in the club, and who would truly
represent an aspect of a "free market." One of his most astonishing assertions concerns the establishment of a predetermined growth rate. Get ready for a little math, Virginia, but it is worth it. The math involves a regression line by least squares to the logarithms of the data... stick with it...and calculating a "coefficient of determination." His data involves the production from 11 quite different countries, over a 22 year period (1950-72). That coefficient is 99.9%(!) which means: "In other words, an assumption that oil production would increase at an average annual
rate of 9.55 percent explains all but one-tenth of 1 percent of the actual change (p100-101) || The author is rich in details and anecdotes on the machinations that promote and maintain beneficial control. For example: "...the
`Brownsville turnaround' scheme, by which imports were brought via tanker from Mexico and unloaded into trucks at Brownsville, Texas. The trucks would then transport the oil under bond 10 mile south across the Mexican border, where they would immediately turn around and reenter the United States carrying what was now transformed into `exempt overland imports.'" The "Majors", with large integrated operation, from exploration through the corner gas station, would be active politically, "buy some politicians", obtain very favorable tax preferences (ah, those "incentives,") and use them to punish the independents, a thesis told well, in one chapter entitled
"The evisceration of the Libyan independents," followed by another entitled
"The Crippling of the Private Branders." His conclusion at the end of the latter chapter: "Whether the product of a carefully engineered, precisely executed plan or the coincidental result of a series of adroit improvisations, problems that only three years earlier had appeared insoluble were now
resolved. Their resolution set the stage for a virtual explosion of prices" ||
OPEC features prominently in Blair's account, but it is not the universal "bad boy" of the media. The author also looks at
the strategic advantages of a higher oil price to the United State vis-à-vis Europe || It's not
all whine and complain. The last part of the book outlines serious public policy objectives, and the mechanisms to achieve them, from conservation
[enx.c] and technology to law, whereby this vital resource can be more equitable and strategically used in the national interest as opposed to the interest of the few. Written over 35 years ago, he covers shale oil, the use of lighter materials, and even electric cars. But he is hardly a Pollyanna, and although rationale alternatives are offered, he presciently describes the most likely scenario, the one that really has been followed: "If a regulatory agency were to propose any action strongly opposed by the industry, the probable subsequent sequence of event is not too difficult to predict. On the one side the agency's few overworked lawyers and economists would try to make a case based on limited amount of publicly available data, supplemented by such fragmentary information as could be pried out of the companies. On the other side, a veritable army of industry lawyers would not only contest the substance of the case by delay interminably... Based on `accepted' accounting principles, leading accounting firms would testify to the oil companies' financial impoverishment, while outstanding economists would emphasize the need for `adequate' earnings to support the industry's growth. Meanwhile, highly skilled public relations firms would be drumming up `grassroots' campaigns against harassment of the industry...Attacks, criticisms, and various forms of sabotage are also to be expected from other
government agencies, many of which have long ago been infiltrated by the industry" || And verily, it
has come to pass, in these intervening 35 years. "The Free Market" reigns, despite the 2008 "hiccup," and the quality of the brandy and cigars in the backroom has improved at least a magnitude. A depressing but essential
read, that should be taken down from the back shelf.

))
}s{
}t{}8{}<>Bower,Tom| a{}n{x
hst.gph.wrl}o{
}r{
*2009:L.ENG,Harper|>Bower.SQUEEZE|
_The_Squeeze: Oil, Money and Greed in the Twenty-First
Century| ((UO| Brd frm Powells))
*2010:NYC,Grand Central|_Oil: Money, Politics, and Power in the 21st Century| ((Brd frm Powells gnr|
US ed of Squeeze abv| "A groundbreaking, in-depth, and authoritative twenty-year
history of the hunt and speculation for our most vital natural resource...The
story of oil is a story of high stakes and extreme risk. It is the story of the
crushing rivalries between men and women exploring for oil five miles beneath
the sea, battling for control of the world's biggest corporations, and gambling
billions of dollars twenty-four hours every
day on oil's prices. It is the story of corporate chieftains in Dallas and
London, traders in New York, oil-oligarchs in Moscow, and globe-trotting
politicians--all maneuvering for power..."--Dust jacket flap))
}s{Wki
}t{}8{}

I say it's unfair to get the most public work of any contractor in the [89/90] state, and
on every hour of that work for every man ... taking fifty cents and hour and adding it to
his own millions.... You know, I'm pretty tired of that socialized millionaire, who is
sucking at the public teat, if you please, who has made his millions from your pocket
and mine in tax money, starting with a dam down here by Austin, most of the highway work
in the state, political connections that gets him lots of Federal work; that's your money
and my money, our tax money....

<>Caroe,Olaf|
a{}}n{}o{
}m{
*1939-1947: ENG [United Kingdom] Secretary of the Foreign Department of the
Government of India, then Governor of NW Frontier Province
}r{
*1949mr:Round Table| rtl on menace of SSR,described by jrn edt as
"...common interests which link the nations round the North Atlantic Ocean
converge again upon the Persian Gulf; and ... there also they find themselves in
proximity and rivalry with the same Soviet power whose menace confgronts them in
Europe" [Lionel Curtis intro to Caroe.Wells:v]
*1951:LND,Macmillan|_Wells of Power: The Oilfields of South-Western Asia, a
Regional and Global Study| ((UO| CWX 1950ja:MAP of ptpt~ of near east:94))

<>Chandler,Alfred D., Jr| a{}n{Greene.STRATEGIES cites}o{
}r{
"Standard Oil and the Early Development of the American Oil Industry"| Inter-Collegiate Case
Clearing House, Harvard Business School (BH120)| ((Std.crp.nrg))
*1962:MA.C MIT|_Strategy and Structure: Chapters in the History of Industrial Enterprise| (())
*1965:NYC, Harcourt...World|_The_Railroads: The Nation's First Big Business: Sources and Readings|
((UO| prm rrd))
*1969au:BH.rvw| "The Structure of American Industry in the Twentieth Century: A Historical Overview"|
*1988:B.MA,HarBusSchP|>Chandler.Essential|_The_Essential Alfred Chandler: Essays Toward a Historical
Theory of Big Business|
}s{
*--Wki
}t{}8{}

<>Clark,William R| a{}n{fnc
plt.irx SaA}o{
}r{
*2005:BC Gabriola Isl.,New Society Publishers|>Clark.Petrodollar|
_Petrodollar warfare: Oil, Iraq and the future of the dollar|
((SMT|
[Wki summary =] The petrodollar system originated in the early 1970s in the wake
[?quarter century = "in the wake"?] of the Bretton
Woods [ID] collapse. President Richard Nixon and
his Secretary of State, Henry Kissinger, feared that the abandonment of the
international gold standard under the Bretton Woods arrangement (combined with a
growing US trade deficit, and massive debt associated with the ongoing Vietnam
War) would cause a decline in the relative global demand of the U.S. dollar.
[2007:You-Tube interview
w/Kissinger on "New World Order"] In
a series of meetings, the United States — represented by then U.S. Secretary of
State Henry Kissinger — and the Saudi royal family made an agreement. The United
States would offer military protection for Saudi Arabia’s oil fields, and in
return the Saudi's would price their oil sales exclusively in United States
dollars (in other words, the Saudis were to refuse all other currencies, except
the U.S. dollar, as payment for their oil exports). || By 1975, all of the
oil-producing nations of OPEC had agreed to price their oil in dollars and to
invest surplus oil proceeds in U.S. government debt securities in exchange for
similar offers by the U.S.

"the crucial shift in US
monetary policy during the 1970s away from the gold standard to becoming the
monopoly currency for worldwide oil sales, effectively enabling the US to
dominate world trade. It then analyses global Peak Oil as an additional driver
of US foreign policy and the parallel growth of political fundamentalism in the
current US administration. Tracking the emergence of
the euro as an important challenger to dollar supremacy, the book pinpoints
Hussein's November 2000 switch to selling oil for euros as the defining moment
for Iraq and, perhaps -- without an immediate change in governance -- for the
noble American experiment."--Jacket.))
}s{}t{}8{}

<>Coll,Steve| a{}n{x}o{
}r{
*1987:N.NY,Atheneum|>Coll.Taking|_The_Taking of Getty Oil: The Full Story of the Most
Spectacular -- and Catastrophic -- Takeover of All Time| ((hst.gph=
Early in book = "Cast of Characters" & that says a lot about the conceptual
foundations of Coll's work -- powerful personalities at center of his histories))
*2004:N.NY,Penguin|>Coll.Ghost|_Ghost Wars: The Secret History of the CIA, Afghanistan,
and bin Laden, from the Soviet Invasion to September 10, 2001| (())
*2012:N.NY,Penguin|>Coll.PRIVATE|_Private Empire: ExxonMobil and American Power|
((ExxM.crp.nrg [ID] | Has Coll matured since 1987?))
}s{Wki
}t{}8{}

<>Conant,Melvin A et al|_The_Geopolitics of
Energy|*1978:B.CO,Westview| ((UO| Up to 1977, then projecting 1977-2000,
including nrg.n| W/policy recomendations and pdx by Levy,Walter J "U.S. Energy
Policy in a World Context"))

<>Cooper,Andrew Scott| a{}n{
plt.irx SaA OPEC IRN mideast}o{
}m{Middle East Institute
bio
}r{
*2008oc16:Middle East Journal | Andrew Scott Cooper interview (and other articles in that journal)
[W]
*2011:NYC,Simon&Schuster|>Cooper.OIL|_The_Oil Kings: How the U.S.,
Iran, and Saudi Arabia Changed the Balance of Power in the Middle East| ((noUO
SMT| CF=0.pdg/wrl| Brd frm Powells| An account of how the USA decision in the mid-1970s to choose
Saudi Arabia as the dominant oil power in the Mideast ultimately led to the Islamic revolution in Iran, and
how oil came to dominate USA domestic and international affairs. The author draws on newly declassified documents
and interviews with some key figures of the time to show how Nixon, Ford, Kissinger, the CIA, and the State
and Treasury departments, as well as the Shah of Iran and the Saudi royal family, maneuvered to control events in the
Mideast. He details the secret USA-Saudi plan to circumvent OPEC that destabilized the Shah; reveals how
close USA came to sending troops into the Persian Gulf to break the Arab oil embargo; and shows how the Ford
Administration barely averted a European debt crisis that could have triggered a financial catastrophe in the USA.
Cooper's Intro [TXT] ))

<>Crosby,Alfred W| a{}n{nrg.gnr
nrg.new}o{
}r{
*2006:NYC,Norton|_Children of the Sun: A History of Humanity's Unappeasable Appetite for Energy|
((good bbl))
((
*2006jy:Technology and Culture#47,3:638-639|>Pasqualetti,Martin J| Review of Children + "...Alfred Crosby
plows old ground, but with the skill of an expert farmer who, although using the same seeds as everybody
else, is able to coax bigger and better plants to take root and flourish. In fewer than 200 pages, he
retells the magnetic story of humanity's progression from energy slave to energy king—starting
with the simplest use of direct sunlight to the control of fire, from the domestication of plants
and animals to the dominance of fossil fuels and the taming of the atom. Along the way, he
offers morsels that stimulate the appetite for more and more helpings. While others
might plant the same seeds, they have never ripened so attractively for the general consumer.

Crosby calls himself a cultural historian who focuses on ideas—especially those of
technology—that change and influence the track of humanity. Tracing energy use over
millennia, he deftly illustrates the relationships between new resources and each upward
leap in civilization and population. In the process, he explains our evolving command of
energy as the most important chain of events ever assembled for human benefit, and he is
enthralled with the progress fashioned at each step. His words reveal a sense of personal
astonishment and a tone of disbelief that humans have actually managed to be as clever as
they have. He sees humanity's adoption of the forms and latitudes of energy as a series of
miraculous achievements that assisted the exploration of the world and the development of lifestyles
that everyone either has already or desperately wants.

To the scientist, the
unadorned interplay of humanity and energy holds endless fascination, but
Crosby's intended audience is wider than the academy. In this, as in many earlier books such
as Ecological Imperialism (1986), he injects anecdotes while refraining from jargon and
scientific parlance. This will not please everyone, of course. Readers may raise an eyebrow
when he points out that, while oil resources could last another couple of generations, "that,
dear reader, is well short of forever" (p. 139). They could be jarred into rereading the
passage in which he acknowledges the difficulty of maintaining a fusion reaction in a laboratory
by comparing it to "a man burning wet wood with a blowtorch" (p. 156). Might this style put
off the more serious student of energy? Perhaps, but it will also attract readers, and they
will marvel at how much they can learn even about complicated matters. Besides John McPhee, few
other writers who address technical themes have the dexterity to be clear and appealing
at the same time.

Thomas Jefferson [?! sic] once said that if he had
had more time he would have written less. In a pithiness that gives testament
to Jefferson, Crosby exhibits the confidence of someone whohas done a lot of thinking
about technology and culture over decades of research and writing. One suspects that while
he was in the midst of preparing earlier books he would
periodically have flashes of insight about energy, and jot these down and file them away
until they amassed enough bulk to merit this book.

Any shortcomings must be considered minor. [nrg.new=] Although Children of the Sun is a catchy
title, it could mislead people into expecting a book entirely about the use of solar
power. While Crosby's more expansive theme is found in the subtitle, the book may
nevertheless surprise some readers. Alternative-energy enthusiasts could be caught up
short when they read that nuclear energy is waiting "at our elbow like a superb
butler" (p. 126). They might be further dismayed when Crosby suggests that we do not
really have much choice about embracing nuclear energy because we cannot meet our needs without it.

Children of the Sun is impressive not because it touches on every facet of energy history, but
because it does not. Its most attractive feature is its brevity.
}s{Wki
}t{}8{}

<>DiGeorgia,James|
a{}n{fnc (+) }o{
}r{
*2005:FL.Boca Raton,21st Century Investor
Publishing|>DiGeorgia.Global|_The_Global War for Oil: A Survival Guide to the
Coming Energy Shock| ((OWN frm Powells| Essentially a guide for investors = When crisis hits, be well positioned in gold|
pro-bzn & vs-ntn.ndp among oilfield nations| See ch on IRN:113-23 -- no doubt,
IRN will loose nuclear weapons on The West ))

<>Engdahl,F.William| a{}n{x}o{
}r{
*1992:Böttiger Verlags-GmbH|>Engdahl.WAR1|_A_Century of War: Anglo-American Oil Politics
and the New World Order|
((SMT| Contains >Ecrn:255-264 = Important dates in hst
of Anglo-American oil politics, seen as an important facet of the "Round-Table"
style global conspiracy| F/Ecrn/a ))
*2004:LND,Pluto|_A_Century of War...|>Engdahl.WAR2| Revised ed|
((E-TXT w/o Ecrn))
*2007je22: oilgeopolitics.net|>Engdahl.OIL| "Oil
and the origins of the ‘War to make the world safe for Democracy’ "
[E-TXT]
*2011:Wiesbaden,edition.engdahl|>Engdahl.WAR3|_A_Century of War: Anglo-American Oil Politics
and the New World Order| ed#3 w/new final ch & NO Ecrn| ((Kmb frm Powells))
}s{
*--Wki bxo of
"eccentric" CF=1968my:USA
}t{}8{}

<>Engler,Robert|
a{1922jy12}e{2007fe23}n{x Σ plt.dms stt&crp cvc.pbl ekn.mlf}o{
}m{
City Unv. of NY PoliSci professor
}r{
*1961:N.NY,Macmillan|>Engler.Politics||_The_Politics of Oil: A Study of Private Power and
Democratic Directions| ((F/Engler/ ndx| [Kaufman.OIL:3-15 Introduction=] Engler.Politics based on an
exhaustive investigation of extant materials, including congressional hearings, government reports,
and the oil industry's own publications, Engler.Politics remains an essential introduction into the
oil industry's operations, including its internal machinations and efforts at public duplicity.
Its principal theme, however, is oil's ability -- through its unique industrial structure, its
inordinate wealth and influence, and its control over an essential commodity -- to subvert public
policy for its own profit and power. Said Robert Engler:

The documentation . . . shows how the petroleum industry has harnessed public law,
governmental machinery, and opinion to ends that directly challenge public
rule. In the name of prosperity and technology, the industry has been able to
destroy competition and limit abundance. In the name of national interest it
has received privileges beyond those accorded to other industries.... In the
name of freedom, the oil industry has received substantial immunity from public
accountability [Engler.Politics:9] ))

*1977:C.IL:UCP|>Engler.Brotherhood|_The_Brotherhood of Oil:
Energy Policy and the Public Interest| ((ndx|
[Kaufman.OIL:3-15 Introduction=] Engler.Brotherhood continues his earlier line of
argument except in harsher terms| Kaufman.OIL links Engler.Brotherhood w/
O'Connor
Here is a later Kaufman.OIL 2-pgf crt = [Engler.Brotherhood]...portrays the oil industry
in an especially sinister fashion, suggesting it is corrupting public officials as
high as the White House itself, being corrupted in return ("was there an
extortion racket being run out of 1600 Pennsylvania Avenue?" Engler asks finally
with regard to the Nixon administration), and generally resorting to whatever
measures are necessary to maintain its "private government" of power. Perhaps
more than any other writer, Engler accepts a conspiratorial analysis of
oil-government relations, although typically this is never stated forthrightly.19

Yet, although Engler's work is characterized by elaborate
documentation and extensive expository footnotes and much of what he says is
persuasive (as is his earlier and, in my opinion, more compelling work,
Engler.Politics),
his "evidence" frequently amounts to nothing more than the type of polemical devices
to which I have already referred. Accepting a corporatist (or revisionist) analysis of foreign policy,
for example, he comments on a "symbiosis between the objectives of the
government of oil and the governments of the United States and South Vietnam" VNM
with respect to the Vwrx, even though he states earlier, "One cannot show that the
oil corporations were central to decision-making about Vietnam."20 It is
the type of innuendo implicit in the use of such a term as "symbiosis," which can
imply anything from an intersection of interests to outright collusion, that I
find particularly worrisome, especially when it results in such a mistatement of
fact as Engler's earlier remark that, "As always, the State and Justice Departments
were predictably supportive of corporate needs for cooperation."21))

<>Fatemi,Faramarz S| a{}
*1980:South Brunswick.NJ,A.J.Barnes|_The_USSR in Iran: The Background History of
Russian and Anglo-American Conflict in Iran,Its Effects on Iranian Nationalism and
the Fall of the Shah| ((>FUiI| irx ENG R&A5.CWX Twrl Iran nrg.p))

<>Ghosh,Pradip K,ed|_Multi-national
Corporations and Third World Development| ((>Ghosh.tntn| tntn.crp~ & Twrl| "High-level
managerial skills may reduce the probability of explosive political developments
but they will not entirely remove it. This is especially so where economic
development brings about extreme levels of inequality, as it has in Brazil.
Indeed, the history of nations since World War II suggests that the more open
the political system, the greater the probability of economic turmoil, political
fragmentation, and political repression (military or otherwise)" [!!] [25] ))

<>Goldman,Marshall|_Petrostate: Putin, Power and
the New Russia| *2008:Ox,OUP| ((>GPP| RUS plt.dms stt&crp))

<>Gulishambarov,Stepan| a{}n{}o{
}r{
*1882: kng~ on Baku and nrg.p industry
*1883:| on heating [wtpt & rtpt=] steamers and locomotives with nrg.p
*:|_The_Petroleum Heating of Room, Kitchen, Bakery, and Other Ranges| ((*2006:Oil of Russia#1|>Troshin,Anatolyi|
"Another Face of Kerosene"|,"the
Russian engineer and technician Stepan Gulishambarov wrote: "Thanks to the simplicity of kerosene ranges'
construction, the substantial concentration of a great quantity of heat in a small space, the low cost of
the fuel, and a large number of other minor conveniences, these ranges have rapidly become popular around
the world and have penetrated wherever kerosene has done so. At present, one can find a multitude of kerosene
kitchen ranges offered for sale: in every European country, and particularly in Great Britain, several hundred
patents have been issued for them; in the United States of America, the number is probably several thousand"
[SOURCE]
}s{
(BSE3)
}t{}8{}

<>Hartshorn,JE|
a{}n{x nrg&ekn nrg&plt.irx (+) }o{
}m{
Economist jrnist
}r{
*1962:NY,Praeger|>Hartshorn.POLITICS1|_Politics and World Oil Economics: An Account of
the International Oil Industry in its Political Environment| ed#1| ((
Kaufman.OIL:15f sd H stresses the competitive nature of the oil industry
notwithstanding its oligopolistic character [Kaufman.OIL has book
title in error = "Oil Companies and Governments"] Intro ftn in
Kaufman.OIL:15f says H [misnamed in Kaufman.OIL] stresses the competitive nature of the oil industry
notwithstanding its oligopolistic character = "Hartshorne
emphasizes especially the differences in the various agreements among the
companies for the production of oil, which, he believes, may give one company a
decided advantage over the others." Hartshorn.POLITICS1:182-3 says=] "To me, this presents itself as
a technique of 'non-price competition,' or at any rate of competition not
necessarily affecting prices to customers, that nobody could call imaginary."
Kaufman.OIL sd H believes that because of vs-fdu pressures, the major companies have
been forced to "lean over backwards in order to maintain postures of
exaggerated apparent competition, and to refrain from overt consultation in
many issues upon which it would be logical to crystallize through open
agreement." H concludes, ". . . it might be better for all concerned if this
industry ... were not judged, and had not always to explain its practice, in
the terms of an early nineteenth-century produce market." [H:222-23 See also ... [G/1961au:JPE]
))

*1967:LND|_Politics and World Oil Economics: An Account of the International Oil Industry and Its
Political Environment| ((>Hartshorn.P0LITICS2|noUO| Preface to ed#2 = things
brought "up to date" but also "I have modified and attempted to clarify my
views" EG=oil pricing has been wholly rewritten; and I have revised my views on
the way that oil cns formulae might evolve to take account of the way that
[OPEC] has to date been able to hasten their evolution"| Back in
Hartshorn.POLITICS1 days I was ndp jrnist: now I am an "energy consultant" with
"a somewhat closer, profession relationship with a number of oil companies and
governments" [14]

CHAPTER 12 "Self-sufficiency in Oil: I. The United States" especially clear
but gentle on the question of dependence of nrg.p cmp~ on gvt regulation, EG=TX Railroad Commission
[TX.rrd.kmm] & H quotes the old saw about how much depends on "whose ox is gored" [IE= gvt off
their backs but glad to have it on someone else's back] [Hartshorn.POLITICS2:211-29 | ed#1=192-209]

<>Hefner,Robert A,III|_Grand Energy
Transition: The Bridge Fuel to Our Sustainable Future| ((ecx EEE| H is Founder and Owner of GHK
(a private nrg.gas company headquartered in Oklahoma City). He
pioneered ultra-deep natural gas exploration and production. GHK led the
development of innovative technology needed to successfully drill and
produce many of the world's deepest and highest pressure natural gas
wells - setting many industry world records along the way. In the 1970s,
Hefner was a leader in the industry's successful efforts to deregulate
the price of natural gas. These technological and political accomplishments led
to the development of vast new domestic natural gas resources))

<>Heilmann,Kilian|>Heilmann.COAL| "The Importance of Access to Coal in the Industrial
Revolution" [*2014se14:E-TXT]

<>Heinberg,Richard| a{}n{ecx EEE lcl.ddd}o{
}m{
Core faculty mmb at New College of California in Santa Rosa CA
}r{
7 kng~ urging action for a sustainable future
*2005:Canada(BCGabriola Island),New Society Publishers|>Heinberg.Party|_The_Party's Over:
Oil War and the Fate of Industrial Societies| ed#2| 2003:ed#1| ((OWN| nrg&plt.irx nrg&plt.dms
"industrial civilization is based on the consumption of energy resources that are inherently limited in
quantity, and that are about to become scarce. When they do [and even before they do], competition for
what remains will trigger dramatic economic [?and domestic political?] and geo-political events; in the
end, it may be impossible for even a single nation to sustain industrialism as we have know it during
the twentieth century" [1]| Alternatives [137-84] plt prognosis = "If the Right gains the
upper hand, the result willl probably be the undermining of civil liberties;
the scapegoating of leftists, minorities, and foreigners; and the expansion
of military and police powers. Democracy will become a ritualized sham at
best. If the Left gains the upper hand, the result might be a kin d of
modern peasant revolt, in which the wealthy will be demonized and punished."
[209] Neither of these paths offers any solution to the problems of energy
depletion. Large-scale national life will deteriorate in the direction of
decentralized, localized solutions = you and your family at home))
}s{}t{}8}

What part does oil play in war? It's easy to conclude that
Western intervention in countries such as Iraq and Afghanistan is primarily
motivated by the West's desire to control precious oil resources. Is this also
true of other conflicts around the world? The contributors argue that there is
an essential problem in the way that recent "oil wars" have been conducted. When
a country's infrastructure is destroyed and it is plunged into political chaos,
as in Iraq, this provides neither security nor stability. Wars over oil further
destabilize faltering regimes---with disastrous consequences
))

((UO
[Kaufman.OIL:3-15 Introduction hst.gph=] Since the oil embargo of 1973 and the
mounting evidence of a world energy crisis that followed, the oil industry has
become the subject of a rapidly expanding and, for the most part, highly
critical body of literature. [EG=G/SNT.MC/ for plt.dms]
Other factors having a similar effect have been the recent revelations of
enormous gifts and campaign contributions by the oil industry to members of
both major political parties and to foreign governments [pgf
on mlf]. Several books suggest
the tone and much of the substance of these recent investigations into what many
regard as not only the world's largest and most important industry, but also its
most powerful and autonomous industry.... Indeed, many of these new works on the oil industry
have portrayed it as a sovereign entity with its own form of government
and with sources of revenue and influence that have allowed it until recently to
dictate pretty much the terms and conditions under which oil would be produced
and sold throughout the world
G/Sampson.SEVEN | G/Solberg.OIL |
G/Rand.dmk | G/Blair.CONTROL |
G/Engler.Brotherhood

<>Kimball,Alan| a{}n{}o{}
*1996: "Russia and Natural Gas in a New Era of International Commerce: How
orderly is the New World Order?"| Paper presented to the Western Regional Slavic
Association then later at a 1998 scholarly conference hosted by OSU| ((Incorporated,
dusted or "dissolved" into this dtf| *1998mr18:Arthur Hanhardt email-Alan Kimball—"How refreshing it is to read of
an academic paper that has natural gas as its subject rather than as either its product or medium"))

<>Kinzer,Stephen|
a{ }n{ stt&ekn irx&nrg }o{ jrnist
}m{
Foreign correspondent for The New York Times who has reported from more than fifty countries on four
continents
Served as the NYT’s bureau chief in Turkey, Germany, and Nicaragua
Columnist for The Guardian[EG]
}r{
*2003:|>Kinzer.Shah|_All the Shah's Men: An American Coup and the Roots of
Middle East Terror| ((E-TXT|
CWX IRN CIA trr))
*2006:|>Kinzer.Overthrow|_Overthrow: America's Century of Regime Change from Hawaii to Iraq| ((UO))
*2013:|>Kinzer.Brothers|_The_Brothers: John Foster Dulles, Allen Dulles, and Their Secret World War| ((CWX NYT rvw
E-TXT|
Excerpts frm NYT rvw =

John Foster Dulles and his brother, Allen, were scions of the American establishment. Their grandfather
John Watson Foster served as secretary of state, as had their uncle Robert Lansing. Both brothers were
lawyers, partners in the immensely powerful firm of Sullivan & Cromwell [Wki], whose New York offices
were for decades an important link between big business and American policy making.

Kinzer highlights John Foster Dulles’s central role in channeling funds from the United States to
Nazi Germany in the 1930s. Indeed, his friendship with Hjalmar Schacht, the Reichsbank president and
Hitler’s minister of economics, was crucial to the rebuilding of the German economy. Sullivan & Cromwell
floated bonds for Krupp A. G., the arms manufacturer, and also worked for I. G. Farben, the chemicals
conglomerate that later manufactured Zyklon B, the gas used to murder millions of Jews. Of course, the
Dulles brothers’ law firm was hardly alone in its eagerness to do business with the Nazis — many on
Wall Street and numerous American corporations, including Standard Oil and General Electric, had
"interests" in Berlin. And Allen Dulles at least had qualms about operating in Nazi Germany, pushing
through the closure of the Sullivan & Cromwell office there in 1935, a move his brother opposed.

Allen Dulles spent much of World War II working for the Office of Strategic Services
[OSS], running the
American intelligence operation out of the United States Embassy in Bern, Switzerland. His shadowy
networks extended across Europe, and his assets included his old friend Thomas McKittrick, the
American president of the Bank for International Settlements in Basel, a key point in the transnational
money network that helped keep Germany in business during the war.

The OSS was dissolved in 1945 by President Truman, but was soon reborn as the
CIA Kinzer notes
that Truman did not support plots against foreign leaders but his successor, Dwight Eisenhower, had
no such scruples. By 1953, with Allen Dulles running the CIA and his brother in charge of the
State Department, the interventionists’ dreams could come to fruition. Kinzer lists what he calls
the "six monsters" that the Dulles brothers believed had to be brought down: Mohammed Mossadegh in
Iran, Jacobo Arbenz in Guatemala, Ho Chi Minh in Vietnam, Sukarno in Indonesia, Patrice Lumumba in
the Congo and Fidel Castro in Cuba. Only two of these, Ho Chi Minh and Castro, were hard-core
Communists. The rest were nationalist leaders seeking independence for their countries and a measure
of control over their natural resources.

Ironically, Ho Chi Minh and Castro, strengthened perhaps by their Marxist faith, proved the most
resilient. But the world still lives with the consequences of bringing down Mossadegh, who might
have guided Iran, and thus world history, along a very different path. The 1953
CIA-sponsored
coup that brought Shah Mohammed Reza Pahlavi to power was seared into Iran’s national
consciousness, fueling a reservoir of fury that was released with the Islamic revolution of 1979.

The Iranian section of Kinzer’s book is especially strong. Here he calls attention to the
cancellation by the Iranian Parliament of a contract for what was said to be "the largest overseas
development project in modern history" with Overseas Consultants Inc., an American engineering
conglomerate. But it seems likely that it was the Iranian Parliament’s vote to nationalize the
oil industry that sealed Mossadegh’s fate. (Allen Dulles represented the J. Henry Schroder Banking
Corporation, one of whose clients was the Anglo-­Iranian Oil Company.)

The brothers’ Manichaean worldview proved to be a poor tool for dealing with the complexities
of the postcolonial era. Leaders like Lumumba and Mossadegh might well have been open to cooperation
with the United States, seeing it as a natural ally for enemies of colonialism. However, for the
Dulles brothers, and for much of the American government, threats to corporate interests were
categorized as support for communism. "For us," John Foster Dulles once explained, "there are two
kinds of people in the world. There are those who are Christians and support free enterprise, and
there are the others." Rejected by the United States, the new leaders turned to Moscow.

The notion that oil motivates America's military engagements in the Middle East
has long been dismissed as nonsense or mere conspiracy theory. Blood and Oil, a
new documentary based on the critically-acclaimed work of Nation magazine
defense correspondent Michael T. Klare, challenges this conventional wisdom to
correct the historical record. The film unearths declassified documents and
highlights forgotten passages in prominent presidential doctrines to show how
concerns about oil have been at the core of American foreign policy for more
than 60 years – rendering our contemporary energy and military policies
virtually indistinguishable. In the end, Blood and Oil calls for a radical
re-thinking of US energy policy, warning that unless we change direction, we
stand to be drawn into one oil war after another as the global hunt for
diminishing world petroleum supplies accelerates.

<>Landeau,J.F. "Strategies of
the Independent Oil Companies"| *1977:Harvard Business School DBA Thesis

<>LeVine,Steve| a{}n{}o{
}r{
*1995se09:NYT on "Western" effort to get ptpt from CSP.S to PAC.O [TXT]
*2007:N.NY,Random House|>LeVine.GLORY|_The_Oil and the Glory: The Pursuit of Empire
and Fortune on the Caspian Sea| ((CSP.S MPR| good gnr))
*2015:|_The_Powerhouse| ((a study of the geopolitics [ggr.plt] of advanced battery technology))
}s{
*--Wki
}t{}8{}

<>Longhurst,Henry| a{}n{}o{}
*1959:LND,Sidgwick and Jackson|_Adventure in Oil: The Story of British Petroleum|
With a foreword by The Rt. Hon. Sir Winston Churchill| ((UO| BP.crp.nrg ID
| Churchill= "I myself
was closely associated with it in its early days in 1913 and 1914"| BP continues great
story of "merchant venturers of Britain"
[ID] [unnumbered p.5] ))

<>Maass,Peter| a{}n{}o{
}r{
*2009:N.NY,Knopf|>Maass.Crude|_Crude World: The Violent Twilight of Oil|
((UO| Official blurb = An examination of oil’s indelible impact on [NB! = ntn.stt~ that pmp & nsx~ w/nrg.p.ggr]
the countries that produce it and the people who possess it. || Every unhappy oil-producing nation is
unhappy in its own way, but all are touched by oil’s unfortunate power to worsen existing problems and create new
ones. Crude World explores the troubled world oil has created—from SaA to IRQ, RUS, NGR, VNZ and beyond.
The book features warlords in the oil-rich Niger Delta, petro-billionaires in Moscow, American soldiers and oilmen
in Baghdad, the gesticulations and politics of [QavH] Hugo Chavez, as well as officials in Riyadh who avoid
uncomfortable questions about Saudi rzv~. [CHN=] Crude World also ventures into Equatorial Guinea, the
setting for misrule and corruption [mlf] as well as a race for oil between American and Chinese firms. || Rebels,
royalty, middlemen, environmentalists, indigenous activists, CEOs—their stories tell the larger story of petroleum
in our time. Crude World is a journey into the violent twilight of oil that answers the questions of what
we do for oil and what oil does to us.))
}s{
*--Personal webpage
}t{}8{}

<>Magner,Mike|_Poisoned Legacy: The Human Cost of BP's Rise to Power Σ|

<>Mann,Charles C|
n{nrg.new frk}o{jrnist homepage
}m{
Atlantic Monthly contributing edt
}r{
*2013my:The Atlantic Monthly|"What if We Never Run Out of Oil"| ((>Mann.Never|
E-TXT | What should one make of the following comment attached by a reader
to this E-TXT =

Oil is a naturally occurring substance, so is natural gas. Hell, oil
seeps straight out of the world's ocean floors. Obama and his democrat
party played up the BP spill in the Gulf, but the fact is, more oil
seeps out of the world's ocean floors yearly, than was spilled by BP.
What is so tragic about the BP spill, is they were forced to drill in
unsafe deep waters by radical leftists like Obama. Had that well been is
safe, shallow water, the disaster would have never occurred. More proof
that liberalism is the greatest threat, not only to mankind, but the
entire world's ecosystems.

<>Margonelli,Lisa|_Oil on the Brain: Adventures from
the Pump to the Pipeline| ((Kmb frm Powells| Pleasant but light-weight essays))

<>Marvin,Charles
Thomas| a{854}e(990)n{RUS.nrg.p CSP.S MPR ENG.vs-RUS }o{ jrn & srv.irx
}m{
*1870:1876; Neva.R region (SPB) njn.works, joined father who worked there| Learned RUS.lng
*1877jy16:LND| Joined GBR ENG.FO
*1878je26:jy16; axx-bcs "leaked" txt of "secret" RUS/ENG trt frm memory to gzt
Globe| Released bcs no lwx vs-such an act
*1882:Joseph Cowen [Wki], brick zvd fxxer,
famous rdx or left-lbx in Parliament, but pro-MPR, sent Marvin to RUS to get the low-down on RUS
ddd in CSP.S rgn
}r{
*1880: First publication about RUS/IND question [so-called "Great Game"], after battle of Geok Tepe
[W-ID] Widely read in RUS, esp. among
mlt.scl~
*1884:|>Marvin.REGION|_The_Region of the Eternal Fire:An account of a journey to the petroleum
region of the Caspian in 1883|
((E-TXT
=1992 ed#2 (1887=signed new preface) with new final ch| ed#1 intro IDs "Kerosene factor of the
Central Asian problem"| Especially acknowledges contribution of pst by Gulishambarov,Stepan [GO] ))
*1885:NYC|_The_Russians at the Gates of Herat| ((UO| RUS as purposeful and direct military
threat to Brt.MPR, focused on Herat, the gateway to IND))
*188?:LND|_The_Petroleum Question: England as a Petroleum Power, or, The Petroleum Fields of the
British Empire| ((E-TXT via ILL))
*1887:LND|_The_Coming deluge of Russian petroleum and its bearing on British trade|
*1889:LND|_The_Coming Oil Age|
}s{
*--Wki
}t{}8{}

((SMT IRQ.wrx|>M.crn:xiii-xviii G/M.crn/ for 25 sig.moments| ch4 = "The Halliburton Gang" = "As vice president, he [Cheney,Dick] pushed
forward the war that brought the company [Halliburton] billions in new revenue.
The federal [72/73] government awarded Halliburton half the value of all
contracts issued in Iraq, an astonishing sum potentially worth nearly $22
billion. The company's stock price rose from $20 to $83 a share over the Iraq
war -- a stunning 300 percent increase." Waxman,Henry(CA HoR), and
Lautenberg,Frank(NJ SNT) led plt fight vs- oil&war nexus. No wrx in USA hst has
been as dependent on one cmp [72] USA mlt "depended on Halliburton
for its existence". & it "made sure the country's petroleum flowed" [72] ))

<>Mir-Babaev,Mir-Iosif|_Kratkaia khronologiia istorii
Azerbaidzhanskogo neftianogo dela|_Brief Chronology of the History of Azerbaijan's Oil Business|
2nd ed| *2004:Baku,"Sabakh"| ((UO| rfr gnr AZR| Much material from AZER.com E-TXT = Part I,
Up to SSR period |
Part II, Up to 2002
[kng goes up to 2004]))

<>Muttitt,Greg| a{}n{x}o{
}m{
Former co-director of campaigning charity Platform
Served as campaigns and policy director for the antipoverty organization War on Want
Lives in London
}r{
Articles in The Guardian, Financial Times, and The Independent
*2005no:"Crude Designs: The Rip-off of Iraq's Oil Wealth" [E-TXT]
*2008jy: "Iraqi Oil on the Block" [E-TXT]
*2012:|>Muttitt.FUEL|_Fuel on the Fire: Oil and Politics in Occupied Iraq| ((SMT IRQ.wrx|
KIRKUS REVIEW
[E-TXT] |
Media Freedom International review [
E-TXT] Story has 4 pt~ [1] & [2] Setting up CPA & crafting new IRQ.crp.nrg.p.lwx
(G) [3] 2006sp:2007; al-Maliki gvt struggles w/zpd.crp.nrg~ &
native IRQ nrg.p INX~ [4] 2007:2011; Big crp.nrg cmp~ take over| IRQ Oil.lwx [pt3,ch##13-19:145-227|
Muttitt reveals the story of the oil politics that played out through the occupation of Iraq.
Drawing upon hundreds of unreleased government documents and extensive interviews with senior
American, British, and Iraqi officials, Muttitt exposes the plans and preparations that were
in place to shape policies in favor of American and British energy interests.))
*?:YouTube
*2012jy16:Democracy Now
YouTube
*2012jy26:YouTube
interview
*?:Podcast interview
*2013fe14:Independent interview
[E-TXT]
}s{}t{}8{}

<>Nash,Gerald
D| a{}n{stt&crp}o{
}r{
*1968:Pittsburgh|>Nash.United|_United States Oil Policy, 1890-1964: Business and Government in Twentieth
Century America| (( SMT| stt&ekn stt&cmp = central theme| "the need
for government to cooperate with business and to assume the function of an
arbiter in the new, highly industrialized society was emerging in America.
[...] it became clear that the United States had undergone a silent revolution
in adjusting its eighteenth-century political institutions to the exigencies of
twentieth-century industrialism" [vi]. Cites Ise.Oil
and Johnson.ptpt
*--Kaufman.OIL says Nash emphasizes the development of an economy characterized by a mixture of private and public enterprise, Nash
stresses the development of cooperation as the prime characteristic of public policy in the petroleum
industry. His book provides the type of balance lacking in many of the recent
[1978] works on the oil
industry, although his view of Eisenhower's oil policy does not agree entirely with my
[Kaufman's] own [Nash=201-8]))

<>Nef,JU|_The Rise of the British
Coal Industry|>Nef.COAL (1966)
((nrg.c| E-TXT))

<>Noreng,Oystein|_Oil Politics in the 1980s: Patterns of
International Cooperation| *1978:NYC,etc, Council on Foreign Relations| ((UO))

<>Pinelo,Adalberto J|
a{}b{}n{ Peru stt.fxx xfxx}o{
}r{
*1973:NYC,Praeger|>Pinelo.Multinational|_The_Multinational Corporation as a Force in Latin American
Politics: A Case Study of the International Petroleum Company in Peru| ((NOndx| tntn.crp AMC LAM CWX|
1922-1968 = "After fifty years of involvement in Peru, Std.NJ.crp nrg, one of the world's largest
corporations with enormous annual profits and assets [in Peru via its International Petroleum Company (IPC)],
was humiliated by the Peruvian government, as it had once humiliated Peru by threatening to shut off the
fuel supplies" [145] ))
}s{
*--Northern Kentucky PoliSci dpt bxo
}t{}8{}

<>Randall,Stephen J| n{x fnc}o{
}r{
*1985:CAN Kingston|_United States Foreign Oil Policy, 1919-1948: For Profits and Security|
((plt.irx good gnr| USA plt.irx based on ensring adequate suppl of oil & ol products to meet
mfg & mlt needs. Has projected USA into regions of INX~ defined solely by nrg.p & by no
other broader irx INX))
*2005:CAN, McGill unv.Press|_United States Foreign Oil Policy Since World War I: For Profits and
Security [0773529225] ed#2 of abv title| ((Brd frm Powells
Forging policy for the postwar era
Containing nationalism, 1919-1928
Oil policy in depression: the Hoover years
From depression to war, 1933-1941
World War II and the structure of decision making, 1940-1943
The petroleum reserves corporation
The preservation of domestic and offshore resources
The failure of internationalism, 1943-1947
American enterprise denied and resurgent, 1945-1948
From Korea to OPEC
From OPEC to the Iranian revolution
From oil shocks to oil wars
Conclusion: reflections on the past and persent
"Balancing the international quest for oil with reduction of dependence on foreign oil
has been a persistent but elusive goal for U.S. governments. Achieving this balance
has been complicated by market excesses and shortages and by periodic anxiety over the
exhaustion of fossil fuel sources. Stephen Randall offers a timely analysis of American
foreign oil policy at the intersection of energy interests and national and international
security interests."--Jacket
))
}s{Wki
}t{}8{}

<>Rifkin,Jeremy| a{}n{x nrg.new ecx mfrR3}o{
W-ID
}m{
ca.2000-2011, 40% of Rifkin's time ~~ EUnion "working with governments, the business community, and
civil society organizations to advance the Third Industrial Revolution" [intro to
Rifkin.Third]
}r{
*2002:NYC,Putnam|>Rifkin.Hydrogen|_The_Hydrogen Economy: The Creation of the World-Wide
Energy Web and the Redistribution of Power on Earth|

((E-TXT
|UO| "Two developments, in particular, are likely to figure prominently in the coming oil equation.

"First, while the experts disagree about when global oil production is likely to peak,
they agree that when it does, virtually all of the remaining untapped rzv~ will be left in
the Muslim countries of the [AfroAsia] Middle East, potentially changing the current power
balance in the world. The juxtaposition of dwindling oil rzv~ and growing militancy
among many of the world's younger Muslim population could threaten the economic
and political stability of every nation on Earth. Political leaders and policy
analysts are particularly worried about the ... possibility that, in the
future, Islamic fundamentalists might pressure their governments to use oil as
weapon against the United States and other Western nationals for supporting the
Israelis.

"Second, if global oil and natural-gas production peaks, catching
the world unprepared, countries and energy companies are likely to look to the
dirtier fossil fuels -- coal, heavy oil, and tar sand -- as substitutes. With
Earth's temperature already projected to rise by 2.52 to 10.44 F degrees between
now and the 22nd century, the switch to dirtier fuels would mean an increase of
CO2 emissions, a greater temperature rise than is now being forecast, and even
more devastating effects on the Earth's biosphere than have already been
envisioned.

"Ours is not the first great civilization in history to face an
energy [5/6] crisis. Energy has played an important role in the rise and fall of
civilizations. [...]

"The United States, and every other country, is
vulnerable to mounting internal and external threats and disruptions as we move
into the last stages of the oil era. Our vulnerability is even more pronounced
because of the highly centralized, hierarchical energy infrastructure, and the
accompanying economic infrastructure, that we created to manage a fossil-fuel
energy regime. The fossil-fuel era is characterized by a top-down organizational
scheme made necessary by the difficulty of harnessing and exploiting
hard-to-find forms of energy. The extraordinary costs associated with the
processing of coal, oil, and natural gas required vast amounts of investment
capital and led to the formation of giant energy enterprises. Currently [2002],
ten to twelve mega-companies, both commercial and state-owned, dictate the terms
by which energy flows through the whole world. By centralizing power over the
Earth's energy resource, the energy companies created the conditions that
rewarded economies of scale, and centralization of economic activity in every
other industry."

Rifkin's solution? World-wide Hydrogen Energy Web [HEW]. Decentralized,
abundant, cheap...| Check out this hostile
review
in The Guardian| See Rifkin's next publication for more on this topic =))

*2011:NYC,Palgrave|>Rifkin.Third|_The_Third Industrial Revolution: How Lateral Power is Transforming
Energy, the Economy, and the World|

((SMT| mfgR#3 in Rfk sense = "The Third
Industrial Revolution is the last of the great Industrial Revolutions and will
lay the foundational infrastructure for an emerging collaborative age. The
forty-year build-out of the TIR infrastructure will create hundreds of thousands
of new businesses and hundreds of millions of new jobs. Its completion will
signal the end of a two-hundred-year commercial saga characterized by
industrious thinking, entrepreneurial markets, and mass labor workforces and the
beginning of a new era marked by collaborative behaviour, social networks, and
boutique professional and technical workforces. In the coming half century
[2011-2061], the conventional, centralized business operations of the First and
Second Industrial Revolutions will increasingly be subsumed by the distributed
business practices of the Third Industrial Revolution; and the traditional,
hierarchical organization of economic and political power will give way to
lateral power organized nodally across society"

Notice how this visionary
almost utopian narrative of a coming future is the nearly polar opposite of the
SAC interpretation of a "third" industrial revolution [ID] ))

[Ross compares what he learned writing this book with what he had concluded
earlier=]
Things I
assumed were true—that petroleum wealth was linked to slow economic growth and weak government institutions—were
probably wrong. Other findings held up, although in modified forms. Patterns that I thought I understood, like
the relationship between oil and authoritarianism, and oil and civil war, were incomplete. Petroleum seemed
to have a stronger and more harmful effect than other kinds of minerals. And I started to appreciate the role
of factors I had overlooked—like the impact of petroleum wealth on economic opportunities for women, which
had far-reaching consequences for women’s political rights, population growth, and long-term economic
growth. Perhaps the biggest surprise was that the resource curse, as we know it today, is a new
phenomenon. The oil-rich countries have long been distinctive; yet before 1980, there were relatively
few political differences between oil-producing countries and non-oil-producing countries. The upheaval
in global energy markets in the 1970s appears to have triggered the resource curse, by producing a
drastic increase in the volume and volatility of government revenues in the oil-producing states.
[xiii-xiv]

Since 1980, the developing world has become wealthier, more democratic, and more peaceful. Yet this is only
true for countries without oil. The oil states -— scattered across the Middle East, Africa, Latin America, and
Asia -— are no wealthier, or more democratic or peaceful, than they were three decades ago. Some are worse
off. From 1980 to 2006, per capita incomes fell 6 percent in Venezuela, 45 percent in Gabon, and 85 percent
in Iraq. Many oil producers -- like [ALG AGO CLM NGR SDN IRQ] Algeria, Angola, Colombia, Nigeria, Sudan, and again, Iraq -- have been
scarred by decades of civil war. These political and economic ailments constitute what is called the
resource curse. It is more accurately a mineral curse, since these maladies are not caused by other kinds
of natural resources, like forests, fresh water, or fertile cropland. Among minerals, petroleum -- which
accounts for more than 90 percent of the world’s minerals trade -- produces the largest problems for the greatest number
of countries. The resource curse is overwhelmingly an oil curse. [Ross.Oil:1]

According to modernization theory -- the prevailing view in the 1950s and 1960s of political
development, later revived in the 1990s and 2000s -- increases in a country’s income per capita would lead
to improvements in virtually every dimension of its political well-being, including the effectiveness of its
government, the government’s accountability to its people, and the enfranchisement of women. In the 1950s, 1960s,
and 1970s, the conventional wisdom was more or less correct. But in the 1970s, something went wrong in the oil states. [Ross.Oil:2]

The goals of this book are to explain why oil is typically a curse, why some countries have escaped the curse, and
how more countries can turn their natural resource wealth from a curse to a blessing. [Ross.Oil:4]

Chapter 3 indicates that oil income is tied to authoritarianism through two pathways: by causing a
high ratio of government spending to perceived government revenues, and by leading to greater
government secrecy, including a lack of budget transparency and restrictions on the media. [Ross.Oil:105]

Since the oil nationalizations of the 1970s, oil-producing countries have had less democracy, fewer
opportunities for women, more frequent civil wars, and more volatile economic growth than the rest
of the world, especially in the developing world. But geology is not destiny. Oil has become a curse
because the revenues that it generates for governments are abnormally large, do not come from taxing
citizens, fluctuate unpredictably, and are easy to conceal from public scrutiny. Most of these qualities
can be changed—by citizens, governments, international institutions, and even consumers in oil-importing
countries. The consequences of petroleum wealth are different today than they were in the past, and they
can change again in the future—perhaps for the better. [Ross.Oil:253, final paragraph]

Sakwa.Quality ToC=
Acknowledgements
Preface
1. Introduction: freedom and property| ch1:1-29=Sets out main issues
2. The birth and transformation of Yukos
3. The state and the oligarchs| ch3:74-107=From "equidistance" to "statism"
4. Why Yukos?| What was essence of Putin-Khodorkovskii conflict? [108-112]
5. The assault against Yukos
6. Khodorkovsky goes to jail|| ??ch#?? lwx & stt.power [262-3]
7. There will be blood
8. From oligarch to 'dissident'
9. Propaganda and public opinion
10. Political and moral economy| Meaning of Yukos affair [332-4, 344-56]
11. Polity and power| ch11:357-79, with final sentence, "As in the Soviet period, economic modernization without
political modernity was an unstable construct"
12. Conclusion: a question of interpretation? [380-96]
Bibliography
Index

<>Sampson,Anthony| a{1926au03}e{2004de18}n{x}o{
}r{
*:|_The_Sovereign State of ITT| ((OWN ndr crp as stt.ndp CPT ekn.tUt|
ch#13:294-313. "The Sovereign State". expands on quote from 1972 Jean-Jacques
Servan-Schreiber [ID] = "The
multinational corporation [tntn.crp] will be disruptive if a political power
does not develop ot put the economy at the service of man, and not put man at
its service"))

*1975:NYC,Viking|>Sampson.SEVEN|_The_Seven
Sisters: The Great Oil Companies and the World They Shaped| ?1988:ed#2?| ((The *1976:Bantam pb ed. has different pagination| 7ss|
Kaufman.OIL quotes on stt&crp

The failure of the Western governments to keep track of the companies and control them has marked
their history since RkfJD. [stt.cxx vs-fdu] It was never clear who was using who. As the business
became more global in the 'forties and 'fifties, so governments thought they were using their
companies by encouraging them abroad, with antitrust clearances [exemption frm
fdu obligations], tax advantages and diplomatic
support, while the companies were in fact far better at using them in ways that were often against
their government's interest

<>Solberg,Carl|
a{1915}n{}o{}
*1976:N.NY,Mason/Charter|>Solberg.OIL|_Oil Power: The Rise and Imminent Fall of an American Empire| ((UO

Kaufman quotes = Solberg's critical view of the oil depletion allowance and tidelands question in Congress in the 1940s
and 1950s|| By 1950 "cooperation between government and big oil had grown so
close that the industry operated in every sense as an insider."| "Texas oil
millionaires buzzed around General Eisenhower" during the 1952 campaign|| "The new administration's ties with members of the
oil industry were soon disclosed. Less than a week after taking office
[G/1953ja:/] it moved
to kill a Justice Department criminal vs-fdu suit against the seven majors for
controlling Middle East output." [AfroAsia] [Solberg.OIL:174] || "...the stt.dpt works hand in glove with the big oil interests. Sixty years after his
grandfather monopolized the business, a Rockefeller is vice-president of the United States." [Solberg.OIL:8]
))

<>United States Senate.
Committee on the Judiciary. Subcommittee on Antitrust and Monopoly| ((vs-fdu
mpy))
*1978:WDC|_Oil Company Ownership of Pipelines|>SNT.ptpt| ((uo|Since 1906, with
the passage of the Hepburn Act, interstate petroleumpiplines have been subject of common
carrier restrictions. However, common carrier regulation has failed miserably to ensure
that all potentiall shippers have practical access to petroleum pipelines and
that the enormous economic benefits of pipeline transportation are passed on
[to] the consumers in the form of lower prices. [... Subsequent history has
shown that common carrier regulation proved to be inadequate] to prevent oil
companies from gaining anticompetitive advantages through ownership of
pipelines" [1] ))

When the first gusher blew
in at Spindletop, near Beaumont, Texas, in 1901 [ID],
petroleum began to supplant cotton and cattle as the economic engine of the state and
region. Very soon, much of theworkforce migrated from the cotton field to the oilfield,
following the lure of the wealth being created by black gold. || The early decades of
the twentieth century witnessed the development of an oilfield culture,
as these workers defined and solidified their position within the
region's social fabric. Over time, the work force grew more
professionalized, and technological change attracted a different type of
laborer.
Bobby D. Weaver grew up and worked in the oil patch. Now,
drawing on oral histories supplemented and confirmed by other research,
he tells the colorful stories of the workers who actually brought oil
wealth to Texas. Drillers, shooters, toolies, pipeliners, teamsters,
roustabouts, tank builders, roughnecks . . . each of them played a role
in the frenzied, hard-driving lifestyle of the boomtowns that sprouted
overnight in association with each major oil discovery. || Weaver tracks
the differences between company workers and contract workers. He details
the work itself and the ethos that surrounds it. He highlights the
similarities and differences from one field to another and traces
changing aspects of the work over time. Above all, Oilfield Trash
captures the unique voices of the laboring people who worked long, hard
hours, often risking life and limb to keep the drilling rigs "turning to
the right." || BOBBY D. WEAVER earned his PhD in history from Texas Tech
University. From 1979 to 2002 he was a museum professional, serving
variously as curator, archivist, and assistant director. Prior to that
he worked for more than twenty years in the oilfield and petrochemical
industries. Weaver is also the author of the award-winning _Castro's
Colony_, published in 1985 by Texas AandM University Press. || WHAT READERS
ARE SAYING: "Given the hundreds of thousands of persons who worked in
the upstream sector of the American petroleum industry (1901-1960), it
is remarkable and lamentable that to this point there has been
relatively little written on the history of oilfield labor in general,
let alone in Texas. For that reason, Weaver's study of oilfield labor
during the first half century of Texas is indeed welcome . . . will make
a substantial contribution to both labor history and the history of the
American petroleum industry."--Diana Hinton, J. Conrad Dunagan Chair in
Regional and Business History, University of Texas of the Permian Basin
))

<>Whiteshot,Charles Austin| a{}n{}o{}
*1905:|_THE_OIL-WELL DRILLER: THE UNIVERSALLY RECOGNIZED STANDARD AUTHORITY OF THE WORLD'S
HISTORY OF PETROLEUM, CRUDE AND REFINED OIL, NATURAL GAS, CARBON BLACK AND ITS BY-PRODUCTS
[E-TXT]
((prm
Author's preface = In bygone years several persons unfamiliar with
the oil industry, not having been directly interested
or employed therein, and a great number of them who
had not seen an oil or natural gas well in operation prided
themselves upon being authorities and authentic
writers of oil history. It was those exaggerated and
misrepresented stories that led the writer to take up the
task of writing an oil and natural gas history of the
world's greatest industry, being a practical oil man
and having had a number of years of actual experience
in the oil business. In the year 1900 I laid aside the
editorial pen on The Oil Region News and at once
began the labor of gathering pictures covering the
entire period of the oil industry from its beginning,
and the compiling of a true and full history of the oil
industry, over five years being consumed in my travels,
visiting every oil and natural gas field of note,
the oil refineries, pipe line systems, shipping points
and offices in the United States, Canada and Mexico.
While the writer of this history is not associated with
any company or individual in this work, and is free
to use his own judgment regarding what is true and
what is not true in oil history, he does not take issue
with any company or individual interested in the oil
and natural gas industry, but he does take exception
to a great number of newspaper articles which greatly
misrepresent the true state of the oil industry. One
in particular, which claims to be a history of the
Standard Oil Company, the main part of the so-called
history was taken from the Congressional Record
from the evidence given before the Industrial Commission
appointed by Congress to investigate the
methods of the Standard Oil trust. The writer for
the magazine very cleverly avoided giving all the
evidence on both sides of the question at trial, and
intentionally avoided giving a true and full report of
the proceedings of the committee, and only permitted that
part that was against the
Standard Oil Company, which led the readers of the article
to form an
opinion of the case without giving the evidence in
full on both sides of the trial. The reader will find
every word of evidence given before this commission
in the rise and history of the Standard Oil Company
in this history. The writer has interviewed all of the
leading shareholders and officials of the Standard
Oil Company and affiliated companies from the general
officials to the officials in the fields, beginning
with John D. Rockefeller and the Standard's army of
assistants ; and to these men the writer is under deep
obligations for courteous treatment received in securing
information and statistics, from the officials in the
general office at 26 Broadway, New York ; the district
officials, the refiners, pipe line officials, and the men
in the fields. This is truly an American company of
American men, who are advancing millions of dollars
each year in establishing markets in all parts of the
world for American oil, and it can truthfully be said
the sun never sets on the supply and demand of American
oil. The writer feels under deep obligations to
Senator Lewis Emery, jr., and a great army of independent
oil producers for favors and kind treatment
in the way of information and records, and to all those
he extends his grateful thanks.
))

<>Wilkins,Mira| a{}n{x
tntn.crp plt.irx}o{}
*1970:C.MA,HUP|>Wilkins.tntn1|_The_Emergence of Multinational
Enterprise: American Business Abroad from Colonial Era to 1914| ((UO| As of
WW1, few USA crp~ did big gtz bzn| Exceptions= Std.nrg.cmp, Singer,
International Harvester, & NYLife(zst) [Wilkins.tntn1:207-9 w/tbl] ))
*1974:C.MA,HUP|>Wilkins.tntn2|_The_Maturing of Multinational
Enterprise: American Business Abroad from 1914 to 1970| ((UO| ch#9 "The
Paradox of Oil" [206-41] The nrg.crp~' model [427-31]))